WPI Inflation for July 2010 stands at 9.97%

by Manshu on August 16, 2010

in Economy

The provisional WPI Inflation numbers for July 2010 were released today, and the number was in single digits for the first time this year.

These are provisional numbers, and the number itself is just 0.03% shy of two digits, so there is a very good chance that it touches double digits (especially because the initial numbers for the past couple of months were revised higher).

Here is the breakup of the WPI Index along with the inflation numbers for some select items for July.

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As you can see – fuel, power, light and lubricants contributed most to last month’s figures, and that was because of the hike in the fuel prices.

Food inflation has eased a bit with the onset of a decent monsoon this time, and hopefully things will be better here-on.  This is especially important because food inflation has been really bad these past years, and it is best exemplified in this chart from an article by Dr. Subir Gokarn, Deputy Governor, RBI.

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The red line is Primary Articles which largely consists of Food Products, and that has been really high dragging the WPI number along with it. Any reduction in that number will help ease inflation a bit.

The good monsoon will assist this time, but I wonder how many bad monsoons it will take for us to develop a solution that is not limited to tinkering policy rates, and rather tackle issues like irrigation, food storage, distribution etc.

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