India’s Wholesale Price Index-based inflation rose to a 16-month high of 3.36% in June, reported The Hindu citing data released by the Ministry of Commerce and Industry on Monday.
This was up from 2.61% in May and 1.26% in April.
The Wholesale Price Index is a measure of inflation expressed by the changing prices of goods at the first instance of their bulk sale in India.
June was the eighth straight month that India’s wholesale price inflation grew on a year-on-year basis after declining for seven straight months before that.
“Positive rate of [wholesale] inflation in June is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum and natural gas, mineral oils, other manufacturing etc,” the ministry said on Monday.
The rate of food price inflation rose to 8.7%, up from 5.52% in April to 7.40% in May, recording the highest increase out of all major commodities. June also saw a near-doubling of the price of manufactured products to 1.43%, from 0.64% in May.
The inflation rate for primary articles, which includes food items like cereals, paddy, wheat, pulses, vegetables, fruits, milk, eggs, meat and Fish, rose to 8.80% from 7.20% in May.
Inflation in wholesale vegetable prices increased to 38.76% in June from 32.42% in May. Inflation in the prices of fruit rose to 10.14% against 5.81% in May.
The rate of inflation of fuel and power, on the other hand, eased slightly to 1.03% in June, as against 1.35% in May.
The Reserve Bank of India’s Monetary Policy Committee on June 7 had decided to keep the repo rate unchanged at 6.5% for the eighth consecutive time.
The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee decides on changes to it every two months.
Central banks usually increase key lending rates amid high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks.
This, in turn, keeps a check on discretionary spending by consumers which is expected to help curb prices rise due to high inflation. However, a higher repo rate also means that the borrowers pay more interest on their loans.
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