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WPI inflation reverses 4-month downtrend; rises to 1.9 percent in July

Inflation based on the wholesale price index (WPI) had been falling since the last 4 months, but in a trend reversal, it increased to 1.9 percent in July. The increase in WPI inflation in July is being attributed mainly to the rise in food inflation. However, there was no change in fuel and other core inflation trends, which continued to fall in July. In June, the WPI inflation was 0.9 percent, which was the lowest in the past one year. The low WPI inflation in June was attributed to the fall in food and fuel inflation. A moderation in core inflation was also witnessed in June.

In July, overall food inflation, which comprises food items as well as processed foods, increased to 2.1 percent. In June, this was only 1.3 percent. Fuel inflation fell to 4.4 percent in July. Earlier, in June, this was 5.3 percent. The fall in fuel inflation in July has been attributed to the reduction in prices of crude oil. The core inflation in July fell to 1.2 percent. In June, this was 1.5 percent. The core inflation is calculated by CRISIL and it is referred to as the CRISIL Core Inflation Indicator (CCII). The CCIL excludes volatile food articles, metals and fuel prices.

In the coming months, inflation would be mostly under control excluding a few items that might witness a price rise. Good rainfall and reduced global crude oil prices will help keep inflation levels in check.

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