August WPI inflation drops to 4-month low of 4.53%

New Delhi: Inflation based on wholesale prices eased to a four-month low of 4.53 percent in August on softening of prices of food articles, especially vegetables.

The Wholesale Price Index (WPI) based inflation stood at 5.09 percent in July and 3.24 percent in August last year.

According to the government data released Friday, food articles registered deflation at 4.04 percent in August 2018. Last month, deflation in this category was 2.16 percent.

Deflation in vegetables was 20.18 percent in August, as against 14.07 percent in the previous month.

Deflationary trend in food articles offset the double-digit inflation in 'fuel and power' basket in August. Inflation in this category was 17.73 percent as prices of domestic fuel increased during the month, in line with high global crude oil rates.

While inflation in liquefied petroleum gas (LPG) was 46.08 percent, in diesel and petrol it was 19.90 percent and 16.30 percent, respectively, during August.

Among food articles, potato inflation continued to rule high at 71.89 percent in August, while onion and fruits witnessed deflation of 26.80 percent and 16.40 percent, respectively.

Deflation continued in pulses at 14.23 percent in August.

The 4.53 percent inflation is the lowest in four months, and a lower inflation than this level was last seen in April at 3.62 percent.

As per the data, the WPI inflation for June was revised downwards to 5.68 percent from the provisional estimate of 5.77 percent.

Brent crude oil price is hovering at around USD 79 a barrel. This, along with a depreciating rupee has increased the oil import bill, thereby making petrol and diesel costlier.

Petrol price Thursday climbed to an all-time high of Rs 81 per litre in Delhi, while in Mumbai it inched up to Rs 88.39. A litre of diesel in the national capital was priced at Rs 73.08 and Rs 77.58 in Mumbai.

Data released earlier this week showed retail inflation eased to a 10-month low of 3.69 percent in August. RBI mainly takes into account retail inflation data while formulating monetary policy.

In its third monetary policy review for the fiscal, the Reserve Bank last month hiked interest rate by 0.25 percent to 6.5 percent on inflationary concerns.

For July-September, RBI pegged CPI-based retail inflation at 4.2 percent, which it saw firming up to 4.8 percent in the second half of the current fiscal.