Stabilising food prices led India’s wholesale inflation to increase in July after it eased for four consecutive months, Reuters reported on Monday. The Wholesale Price Inflation index rose by 1.88% in July compared to a 0.63% increase in July 2016. Stakeholders are anxious about the consumer inflation numbers expected later in the day.
Easing price pressures helped the Reserve Bank of India reduce its key rates by 25 basis points in August, the lowest since November 2010. The apex bank had maintained a “neutral stance” and forecast a possible rise in inflation.
“It is still uncertain whether a 25 basis points rate cut by the RBI on 2 August 2017 will help in reviving consumption demand, it is for sure unlikely to impact investment demand,” said
Wholesale inflation doubling to 1.88% in July 2017 from 0.90% in June 2017 was on expected lines, said Chief Economist of India Ratings and Research Devendra Kumar Pant. “The rise was mainly due to two months deflation [May and June 2017] in food articles turning around in inflation.”
Pant compared the inflation figures to the index of industrial production data released on Friday, saying the two indicated that “the economy was caught in a low growth phase – weak consumption and investment demand”.