Wholesale inflation spikes to 54-month high in June

Tribune News Service

New Delhi, July 17

Wholesale Price Inflation (WPI) jumped to a 54-month high of 5.77% in June, prompting many experts to predict a rate hike by the RBI in August.

The WPI-based inflation stood at 4.43% in May and 0.90% in June last year, as per the government data released on Monday. 

Aditi Nayar, Principal Economist, ICRA, said the lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to the sharp pickup in the WPI inflation in June.

“The sharper-than-expected uptick in the WPI inflation in June reinforces our expectation of a likely repo rate hike at the next MPC meeting in August 2018”, Nayar added. The Monetary Policy Committee (MPC) of the RBI is scheduled to meet next month.

“We believe, with sharp rise in both CPI and WPI inflation, RBI is likely to tighten policy by 25 basis points in the August”, said Dhananjay Sinha, Head of Research, Emkay Global Financial Services.