Inflation at -1.58% in week ended July 25

India’s inflation, as measured by the wholesale price index (WPI), fell for the eighth straight week and stood at -1.58% in the week ended July 25 as compared to -1.54% in the week ended July 18. It was at 12.53% during the week ended July 26, 2008. The WPI for ‘All Commodities’ for the week ended July 25, rose by 0.04% to 236.9 from 236.8 for the previous week. The index for Primary Articles rose by 0.4% to 262.2 while the index for ‘Food Articles’ group rose by 0.8% to 261. The index for ‘Non-Food Articles’ group declined by 0.4% to 241.5. The index for Fuel, Power & Light group remained unchanged at its previous week’s level of 338.2. The index for Manufactured Products group declined by 0.1% to 205.6.

Week-on-week, the WPI was almost flat, for the second straight week. While prices of primary articles rose WoW, prices of manufactured goods remained unchanged. Inflation in primary food articles is almost in double digits - 9.7% for the week ended July 25. They are rising at their fastest pace since early February and are largely responsible for the recent spike in CPI. With monsoon so far being significantly below average, there is further upside risk to primary food prices. WPI inflation will likely remain in negative territory till September, and is expected to rebound sharply as the base effect wears off. WPI inflation is seen at over 5% by the end of the year.