The inflation in wholesale prices moderated from a 16-month high of 3.4% in June to 2.04% in July, with the rise in food prices cooling to 3.55% from 8.7% a month earlier. However, month-on-month gains in food prices accelerated to 2.7% from 2.1% in June, the highest pace in at least six months.

The decline in price rise in the food index in July was driven by vegetables whose prices fell 8.9% year-on-year from a 39% spike in June, but this was on account of base effects as vegetable prices had risen 67.6% in July 2023, when overall wholesale prices had clocked a deflation of -1.23%.

Moreover, apart from eggs, meat and fish, whose prices fell 1.6% from last July, there was no respite seen in most other food items’ price rise levels. Onion and potato prices rose a whopping 88.8% and 76.2%, respectively, while pulses were 20.3% pricier on top of a 9.6% rise reported last July.

Fruits were 15.6% costlier compared with a 10% decline last July. Cereals, paddy and wheat prices were up 9%, 11% and 7%, respectively, on top of similar price gains in the same month last year.

Overall prices rose 0.84% in July compared with June levels, marking the sharpest sequential uptick since April, and primary articles prices rose 3.13% from June, which is again the sharpest pace in at least half a year..

On a year-on-year basis, inflation in fuel and power accelerated to 1.7% in July from about 1% in the previous two months, while manufactured products also reported a higher uptick of 1.6%.

Bank of Baroda economist Jahnavi Prabhakar noted that inflation for fuel and manufactured products has been inching up in the last three months and though their levels are not significant yet, they reflect on producers who are gradually increasing their prices.

The Commerce and Industry Ministry attributed the positive rate of inflation in July, “primarily to increase in prices of food articles, manufacture of food products, mineral oils, crude petroleum & natural gas, other manufacturing etc.”

Senior economist at ICRA Rahul Agrawal flagged that the core (non-food manufacturing) Wholesale Price Index (WPI) continued to inch up for the fifth consecutive month and hit a 17-month high of 1.2% in July.