Chief Analytical Officer, Mr. Suman Chowdhury
Fuel inflation eases, while food inflation plays spoilsport
India's wholesale inflation continued to ease further to an eleven-month low of 12.41% YoY in Aug-22 from 13.93% in Jul-22. Notwithstanding the sequential gyrations in the monthly price momentum, the peak inflationary concerns on the retail as well as on the wholesale front seem to be behind us with some comfort derived from the significant moderation in crude oil prices and easing of supply chain constraints. Sequentially the print declined for the second consecutive month by 0.5% MoM in Aug-22 from 0.1% in Jul-22, primarily led by a decline in consolidated fuel inflation (comprising of crude petroleum and fuel & power).
WPI core inflation (non-food manufacturing inflation) is estimated to have eased marginally to 7.9% YoY in Aug-22 from 8.4% in Jun-22, with sequential print increasing marginally by 0.14% MoM from a contraction of 0.26% in the previous month.
Going forward, there is a scope for further easing in wholesale inflation trajectory owing to the rising base, softening of commodity prices on intensifying recessionary fears across major advanced economies, and weaker demand conditions in China. However, prolonged geopolitical tensions and currency depreciation may offset some of these comfort factors.
Says Suman Chowdhury, Chief Analytical officer, Acuité Ratings & Research "Clearly, the differential between CPI and WPI inflation is on its way down with moderation in commodity prices and gradual pass-through of the input cost pressures that producers have faced earlier. The rate of further decline in the WPI inflation will be dependent on the Kharif harvest and the extent of unwinding of global crude oil prices. The trajectory of CPI, however, may not be similar to that of WPI, given the expected recovery in demand. We expect a gradual moderation in the CPI print in the current year with an average of 6.7% for FY23."