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NEW DELHI: India’s wholesale price index-based (WPI) inflation in July fell to a five-month low of 13.93%, on the back of easing food prices, according to data released by the ministry of commerce and industry on Tuesday. Despite the fall, WPI inflation has stayed in double digits for the 16th month in a row now.

WPI inflation rate in May had jumped to a record high of 15.18%, as international oil prices hovered well above $100 a barrel due to geopolitical concerns. Brent, the global benchmark for oil prices, has since cooled to $94.27 a barrel amid concerns of a global slowdown.

Data released today showed that food inflation in July moderated to an eight-month low of 8.7%, and was lower than 11.8% in June, as the rate of price rise in vegetables slowed down to 18.25% in July against 56.75% in the previous month.

However, fuel and power inflation inched up to 43.75% in July from 40.38% last month. Core WPI grew at 8.4% year-on-year in July compared with 9.3% in June on the back of cooling global commodity prices.

“The print is only expected to move within the comfort band in the fourth quarter, as price pressures in the economy remain contingent upon the evolving geopolitical developments. We believe that ongoing global issues on the energy front and commodity inflation would continue impacting domestic inflation to some extent over the near to medium term, while towards FY23-end we would see inflation coming under control," Reliance Securities said.

Experts said the Reserve Bank of India (RBI) could continue to increase policy rates as retail inflation continues to be well above the central bank’s comfort zone. RBI governor Shaktikanta Das has said that retail inflation is expected to remain above the central bank’s 6% threshold in the second and third quarters of this fiscal year.

The central bank has projected retail inflation to average 6.7% in 2022-23.

While the RBI has hiked key interest rate three times this year to 5.40%, the Union government has taken multiple steps including export curbs on essential food items to rein-in runaway inflation ahead of the festival season.

A mix of factors had led to a sharp rise in global food prices, some of these have reversed recently, for instance, the export ban on palm oil by Indonesia, HSBC said in a research report.

International edible oil prices like that of palm oil have fallen by 40%, which is an important development for India as it imports 60% of its needs and edible oils make up 4% of the CPI basket.

“Global wheat prices too were up, but have fallen 25% from its peak as new supplies have become available. This, too, is important for India because its wheat crop this year was sub-par," the report added.

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