India wholesale inflation shoots up on food prices

India’s annual rate of inflation based on wholesale prices shot up to 3.55% for July from 1.62% in the previous month, due to an 11.82% jump in prices of food articles, official data showed yesterday.The prices of potatoes continued to pinch with an annual rise of 58.78%, pulses were dearer by 35.76%, while fruit were 17.30% costlier over the same month of the previous year, as per the Wholesale Price Index (WPI) data of the commerce ministry.Data released last week showed that the country’s annual retail inflation shot up to a 23-month high of 6.07% for July and beyond the official tolerance level of 6%, again due to higher prices for food articles.The July WPI index at 3.55% marks a two-year high. After rising for the first time in April following 17 straight months of contraction, the WPI has cumulatively risen by 4.91% in the current fiscal up to July. The rise was 0.85% for the corresponding period last year.Inflation in vegetables prices during July rose to 28.05%, up from 16.91% in June. Prices of manufactured products, which comprise nearly 65% of the index, continued to rise for the fifth straight month, rising by 1.82% in July. The prices had risen by 1.17% in June.The sub-category of manufactured food products, which includes sugar and edible oils, registered a significant rise of 10.19%, up from 8.35% in the previous month.This was mainly caused by a spurt in sugar prices, which rose by 32.33%, as against 26.09% in the previous month, as a result of production shortages.Fuel inflation remained negative in July, going down by one% as compared to a 3.62% fall in June and 6.14% in May due to fall in crude oil prices.However, diesel prices continued to rise after seeing an uptrend in June after many months of consecutive fall. Prices of high-speed diesel rose by 6.57% in July, from a 1.13% rise in June.In this connection, industry chamber Assocham said on Sunday on the basis of its study that prices of vegetables in India’s retail markets are likely to go up further in the coming months with the peak production season coming to an end.The report said there would be “more pressure on the market arrivals of vegetables as production season eases”, on the basis of a “most worrying” trend that saw vegetable prices rising up to 100% in the April-July period due to low arrivals of the harvest in themarkets.“There is a huge gap between retail and wholesale prices of vegetables. On an all-India average basis, retailers are selling at more than 52.7% of wholesale prices,” Assocham secretary general DS Rawat said in a statement here. At the retail level, potato prices increased by about 100% during the April-July period, over the corresponding period of 2015, followed by cabbage (49.3%), chillies (47.8%), garlic (37%), cauliflower (33.9%), tomato local (26%), tomato hybrid (25.6%), potato fresh (25%), okra (22.3%) and brinjal (20.8%). “It indicates a worrying situation where market arrivals of vegetables have recorded contraction despite being a peak season for production,” the report said.The gap between wholesale and retail prices is as much as over 75% in some cases like brinjal and over 62% for tomatoes, it added.