Wholesale food prices continued to rise. The
Food Index-based inflation rose to 4.32 per cent in July compared with 3.05 per cent in June and 2.73 per cent in May. Wholesale prices of fuel and power rose sharply as well, to -9.84 per cent in July from -13.6 per cent in June and -23.08 per cent in May.
Among wholesale food price sub groups, vegetable saw the biggest spike in prices at 8.20 per cent in July compared with -9.21 per cent in June, while fruits fell to -3.03 per cent from 2.31 per cent. Wholesale onion prices deflated to -25.56 per cent from -15.27 per cent.
“The wholesale primary food inflation recorded a sharper climb in July 2020 relative to the previous month, as compared to the modest uptick in the retail food inflation, highlighting the varied trends at the mandi and retail level. Nevertheless, the CPI food inflation remained much higher than the wholesale food inflation in July 2020,” said Aditi Nayar, Principal Economist with ICRA Ltd.
“With a sharp base effect. we expect the core items to record a turnaround to a mild inflation in August 2020, even as the headline WPI may remain in disinflation, the pace of which is likely to narrow further,” Nayar said.
“Wholesale price inflation in the next month could pick-up further and could record positive inflation in August largely driven by pick-up in wholesale food prices owing to supply disruptions led by imposition of lockdown measures in certain parts of the country. However, supply of fresh kharif stocks could partially ease wholesale prices to some extent. Prices in the fuel segment could continue to remain in the negative trajectory owing to benign crude oil prices,” said Madan Sabnavis, Chief Economist with Care Ratings.