New Delhi: India’s wholesale prices recorded a modest increase in August, reversing the decline witnessed in the previous month, signaling that inflationary pressures may be resurfacing in the economy. According to government data released on Monday, the Wholesale Price Index (WPI) rose 0.52% year-on-year, compared to a fall of 0.58% in July. The uptick was sharper than the 0.3% rise expected by economists surveyed prior to the release.
The data reflects a mixed picture across key sectors, with some areas showing continued weakness while others displayed notable upward momentum. Economists note that while the headline number remains subdued, it highlights early signs of cost-push inflation that could eventually feed into consumer prices.
The wholesale price of food items, which often plays a crucial role in shaping inflation sentiment, increased 0.21% in August. This marked a sharp turnaround from the 2.15% decline in the same month last year. However, the underlying trends remain uneven. Vegetables continued to exert downward pressure, with prices dropping 14.18% year-on-year. Although steep, the fall was significantly milder than July’s 28.96% decline, suggesting that the worst of the price slump in this segment may be easing.
Analysts point out that weather conditions, supply chain fluctuations, and local harvest cycles often dictate sharp swings in food inflation. The narrowing of the decline in vegetable prices could signal relative stabilization ahead, particularly as demand begins to pick up with the festive season around the corner.
The manufacturing sector emerged as a key driver of the wholesale price rise. Prices of manufactured goods climbed 2.55% in August, up from 2.05% in July, reflecting stronger demand as well as higher input costs. Industry experts say that this increase indicates resilience in industrial activity, though it could add to inflationary pressures if sustained.
Manufactured products hold significant weight in the WPI basket, and their steady climb underscores the possibility of cost pass-through into retail markets in the months to come. For policymakers, the rise suggests that inflationary risks may not be entirely under control, despite recent softening trends.
In contrast, the fuel and power category provided some relief, with prices declining 3.17% year-on-year in August, compared to a 2.43% drop in July. The extended fall in energy prices mirrors international commodity market movements and domestic factors, including regulated fuel costs. While this helps contain broader inflation, it also points to subdued demand in energy-intensive industries.
The latest figures come at a time when the Reserve Bank of India (RBI) has been closely watching inflation trajectories to calibrate monetary policy. Wholesale prices often serve as a leading indicator for retail inflation, which directly affects households. The rise in manufacturing prices, coupled with easing food deflation, may alert the central bank to the risk of consumer prices climbing in the coming months.
Economists emphasize that while the August WPI figure remains modest in absolute terms, it marks a clear reversal from July’s contraction and underscores the fragile balance between inflation control and growth support. The RBI is likely to weigh these developments carefully, especially as India navigates global uncertainties in commodity markets and domestic supply-side pressures.
Looking ahead, much will depend on global energy prices, the progress of the harvest season, and domestic policy measures to support supply chains. If vegetable price declines continue to moderate and manufacturing costs rise further, wholesale inflation could gain momentum through the second half of the year.
For now, India’s wholesale inflation picture remains subdued but far from settled a delicate reminder that inflationary forces continue to shift beneath the surface of the economy.