India’s retail inflation rises to 4.82%, wholesale inflation climbs to 9.92%

India’s retail inflation accelerated in August, while wholesale inflation moved closer to double digits, pointing to renewed price pressures across food, fuel and manufactured goods.Consumer Price Index (CPI)-based retail inflation rose to 4.82% in August, from 4.45% in July, according to data released by the ministry of statistics & programme implementation.The August reading was the highest under the new CPI series, which began in January, and was marginally above the 4.80% estimate in a Reuters poll.Wholesale price-based inflation, meanwhile, rose to 9.92% in August from 9.78% in July, according to data released by the commerce and industry ministry.It was the second-highest reading in the new WPI series, which has 2022-23 as its base year.Food inflation remains a key pressure pointRetail food inflation, measured by the Consumer Food Price Index (CFPI), rose to 5.95% in August, compared with 5.52% in July.Food inflation was higher in rural areas at 6.13%, while urban food inflation stood at 5.64%. Overall CPI inflation was also higher in rural areas at 5.23%, compared with 4.31% in urban areas, according to the official data.Among CPI divisions, personal care, social protection and related goods and services recorded the highest inflation at 15.17%, followed by restaurants and accommodation services at 8.38%.Food and beverages recorded inflation of 5.66%, while paan, tobacco and intoxicants registered 4.71%. Transport inflation stood at 4.60%, followed by education services at 3.73% and clothing and footwear at 3.56%.Health recorded the lowest inflation among the tracked divisions at 1.34%.On the wholesale side, food inflation increased to 7.05% in August from 6.65% in July.Wholesale fuel inflation jumps over 22%Fuel and power emerged as a major driver of the increase in WPI inflation.Wholesale inflation in the fuel and power basket rose sharply to 22.93% in August from 20.05% in July.The commerce and industry ministry said mineral oils, food articles, manufactured food products, basic metals, non-food articles and chemicals were among the major drivers of overall WPI inflation.Manufactured products inflation also rose to a series high of 8.37% in August, from 8.29% in July.Barclays said the increase in fuel and power inflation was driven by higher mineral oils and natural gas and petroleum prices amid an increase in international energy prices.What economists expect nextThe recent rise in inflation has also raised concerns over the outlook for monetary policy.Barclays said the rebound in global energy prices amid the renewed escalation in West Asia would continue to put upward pressure on WPI and producer prices. It said it no longer expected “any meaningful moderation in the upcoming inflation prints”.According to news agency PTI, India Ratings and Research chief economist Devendra Pant said the prolonged West Asia crisis had reversed the two-month decline in fuel and power inflation and that the pressure was likely to remain elevated until the crisis was resolved.Ind-Ra expects wholesale inflation to rise to 10.2% in September and remain elevated through the rest of the year unless a permanent solution to the West Asia crisis is achieved.ICRA principal economist Rahul Agrawal said food inflation could harden further in September and October because of an unfavourable base and stronger sequential increases in some food items, including sugar.He expects WPI inflation to remain above 9.5-10% in September-October before cooling thereafter, aided by a favourable base, unless global energy and commodity prices rise further.RBI rate outlook in focusThe August CPI reading remains within the Reserve Bank of India’s 2-6% inflation tolerance band, but economists differed on the likelihood and timing of a rate hike.According to Reuters, ICRA chief economist Aditi Nayar said a rate hike could come in December, particularly if inflationary pressures broaden and crude prices remain elevated.If crude prices stay high ahead of the October Monetary Policy Committee meeting, she said the hike could be brought forward to October.HDFC Bank principal economist Sakshi Gupta expects inflation to move above 5% from October but said the RBI could keep the policy rate unchanged in October and remain in a wait-and-watch mode.Anand Rathi chief economist Sujan Hajra said the policy environment did not support monetary easing, given robust economic growth, elevated inflation and pressure on the rupee. He said the repo rate was likely to remain unchanged for an extended period, with the possibility of a rate cut now remote.Oxford Economics lead economist Alexandra Hermann Prasad said price pressures were likely to continue rising, with inflation potentially moving above 5% and breaching the RBI’s 6% upper tolerance limit in the fourth quarter.At the same time, IDFC Bank chief economist Gaura Sengupta said core-core inflation, which captures demand-side inflation, remained benign and expected FY27 CPI inflation to average around 5%, driven mainly by supply-side factors such as food and fuel.Get the latest Business News and Live updates. Download the TOI app.