India's July WPI inflation slows as economy falters

India's July WPI inflation slows as economy falters

14 Aug 2019 05:39 PM

India’s annual wholesale price inflation in July eased to a 25-month low of 1.08%, indicating manufacturers are losing their power to raise prices as an economic slowdown deepens.

Manufacturing inflation, which contributes around 64% to the wholesale price index, rose just 0.34% in July from a year earlier, compared with 0.94 percent in June and 4.53% in July 2018.

As a result, headline WPI inflation weakened more than expected from 2.02% in June. Analysts had expected it to dip to 1.93%.

The weak wholesale inflation data reinforced views that the Reserve Bank of India (RBI) will cut interest rates for a fifth straight time at its next policy meeting in October in a bid to stimulate consumption.

Wholesale food prices in July rose 4.54% year-on-year, compared with a 5.04% jump a month earlier, the data showed, while wholesale prices of fuel products, including petrol, diesel and cooking gas, fell. That could help the economy as India meets nearly 80% of its oil demand through imports.

India’s retail inflation, the main gauge used by the central bank to monitor prices and decide on whether to change its benchmark repo rate, eased in July to 3.15%, data showed on Tuesday, remaining below the central bank’s 4% medium-term target for a 12th straight month.

India’s economic growth slowed to a five-year low of 5.8% in the January-March quarter as a result of sluggish domestic and global demand and little growth in private investment.

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