WPI inflation eases to 3-month low of 15.18 pc in Jun

The wholesale price-based inflation eased to a three-month low of 15.18 percent in June on a sharp decline in the prices of minerals, but food articles continued to remain costly.

June is the 15th consecutive month when the Wholesale Price Index (WPI) based inflation remained in double-digit. Last month, it touched a record high of 15.88 percent. In June 2021, it was 12.07 percent.

Inflation in food articles in June was 14.39 percent, as prices of vegetables, fruits, and potatoes witnessed a sharp spike over the year-ago period.

In May, the wholesale price inflation in food articles was 12.34 percent.

The rate of price rise in vegetables was 56.75 percent, while in potatoes and fruits, it was 39.38 and 20.33 percent, respectively.

In the fuel and power basket, inflation was 40.38 percent, while in manufactured products and oil seeds, it was 9.19 percent and 2.74 percent, respectively.

Inflation in crude petroleum and natural gas was 77.29 percent in June.

Icra Chief Economist Aditi Nayar said minerals and basic metals displayed a sharp month-on-month correction in June 2022, as fears of an impending global recession unfolded, dampening commodity prices.

''We expect the WPI inflation to ease to 13 percent in July 2022, reflecting the ongoing correction in global commodity and fuel prices as well as domestic food prices,'' Nayar said.

She said that the RBI could hike interest rates by 60 bps over the next two reviews, taking the repo rate to 5.5 percent by September 2022, followed by a pause to ascertain the momentum of economic growth.

The RBI mainly looks at retail inflation to frame monetary policy. The next meeting of the RBI's interest-setting monetary policy committee is on August 2-4. Retail inflation remained above the Reserve Bank's comfort level for the sixth month in a row and was at 7.01 percent in June.

The RBI projected inflation to be at 7.5 percent in the June quarter (Q1) and 7.4 percent in the September quarter (Q2), before easing to 6.2 percent in the December quarter (Q3) and further to 5.8 percent in the March quarter (Q4) this fiscal.

To tame stubbornly high inflation, the RBI has hiked the key interest rate by 90 basis points in the last two months.

The central bank also raised the inflation projection by 100 basis points to 6.7 percent for 2022-23.