India wholesale price inflation eases to 9.78 per cent in July

India's wholesale price inflation (WPI) stood at 9.78 per cent in July, marking a slight month-on-month softening from 9.87 per cent in June. This deceleration was primarily driven by easing inflation in the fuel and power sectors, which dropped to 20.05 per cent from 27.41 per cent in June, and a marginal easing in food article inflation to 5.44 per cent.

Despite the monthly softening, several factors pose ongoing risks to price stability. Economists note that oil price volatility, driven by geopolitical tensions in the Middle East and threats to key waterways like the Strait of Hormuz, could exert upward pressure on imported commodities. Additionally, strengthening El Nino effects during the August-September period are expected to impact food prices and headline WPI.

While fuel and power inflation moderated, manufactured products saw an uptick in inflation, rising to 8.29 per cent in July from 7.48 per cent in June. Major drivers of the current WPI include mineral oils, food articles, and the manufacture of basic metals and chemicals. Analysts suggest that while global commodity prices may have peaked, leading to gradual disinflation, the combination of freight costs and climate patterns remains a significant variable.