Overview of Inflation for June 2024 (CPI & WPI)

The inflation rate in June rose to 5.08%, up from 4.75% in May 2024. This increase was largely driven by a sharp rise in food and beverage prices, especially in fruits, vegetables, cereals, oils, and fats. The cost of fuel and light also saw a slight increase of 0.1% in June 2024. Despite these upward trends, the Core Consumer Price Index (CPI) remains below the Reserve Bank of India’s (RBI) target of 4%. This persistent gap between the overall inflation and the core CPI suggests that while some sectors experience significant price hikes, the underlying inflationary pressures remain relatively contained. This data highlights the mixed economic signals and the complexities faced in managing inflation effectively.

Decoding June Inflation: Analyzing the Factors Behind the Surge

June's inflation data has brought the seasonal index back into focus, with food inflation rising to 9.36% year-over-year (YoY), up from 4.55% in June 2023. This sharp increase is largely due to a low base effect. Last year, food inflation spiked in July because of a delayed monsoon. This year, despite another delayed monsoon, an intense heat wave has driven prices up much earlier.

Vegetable price inflation alone has added a significant 1.8% to the overall Consumer Price Index (CPI) basket, which saw a 5.1% YoY increase, breaking a six-month trend of disinflation. However, the extreme rise in vegetable prices is a temporary issue and a statistical anomaly due to distorted base numbers. Over an eight-year Compound Annual Growth Rate (CAGR), vegetable prices have increased by 4.9%, compared to 4.8% for the overall headline number.

Core inflation remains a concern, with a sequential increase of just 0.16%, the lowest since the start of 2024. Meanwhile, gold has seen a significant YoY increase of 20%, the highest in more than three years.

The Monetary Policy Committee (MPC) is steadfast in their decision to avoid cutting rates. The higher CPI number supports their stance to maintain high rates, aiming to align the CPI with their target. While this decision has little impact on the temporary rise in food prices, which is primarily due to supply issues, it highlights the challenges of managing inflation in the current economic climate.

Inflation Rate for June 2024

The year-on-year inflation rate based on the All-India Consumer Price Index (CPI) for June 2024 is provisionally recorded at 5.08%. The corresponding inflation rates for rural and urban areas are 5.66% and 4.39%, respectively.

Inflation Trends for June 2024

Inflation rates for specific sub-groups including ‘Eggs’, ‘Spices’, ‘Meat & fish’, and ‘Pulses & products’ have shown a decrease compared to May 2024. The All-India inflation rates, based on General Indices and Consumer Food Price Index (CFPI), on a point-to-point basis (June 2024 over June 2023) are as follows:

• All India CPI: 5.08%
• Rural CPI: 5.66%
• Urban CPI: 4.39%

All India year-on-year inflation rates (%) based on CPI (General) and CFPI: June 2024 over June

2023

Monthly changes in the General Indices and Consumer Food Price Indices (CFPIs) are detailed below:

The percentage changes in All India CPI (General) and CFPI for June 2024 compared to May 2024 are as follows:

High Response Rate for Price Data Collection in June

2024

The response rate for price data collection in June 2024 by the NSO, MoSPI's Field Operations Division was high. Prices were gathered from 1114 urban markets and 1181 villages across all States/UTs through weekly visits by field staff. The NSO successfully collected prices from 99.7% of villages and 98.6% of urban markets, with market-wise reporting rates of 88.9% for rural areas and 93.0% for urban areas.

All-India General, Group and Sub-group level CPI and CFPI numbers for May 2024 (Final) and June 2024 (Provisional) for Rural, Urban and Combined.

(Base: 2012=100)

All-India year-on-year inflation rates (%) for General, Group and Sub-group level CPI and CFPI numbers for June 2024 (Provisional) for Rural, Urban and Combined.

(Base: 2012=100)

Wholesale Price Index Numbers for June 2024 (Base Year: 2011-12)

June 2024 Wholesale Price Index: Annual Inflation Rate at 3.36%

The annual inflation rate based on the All-India Wholesale Price Index (WPI) is provisionally reported at 3.36% for June 2024, compared to June 2023. This positive inflation rate is primarily driven by rising prices in food articles, manufactured food products, crude petroleum and natural gas, mineral oils, and other manufacturing sectors. Below are the index numbers and inflation rates for 'All Commodities' and WPI components for the past three months.

Index Numbers and Annual Rate of Inflation (Y-o-Y in %)

The month-over-month change in the Wholesale Price Index (WPI) for June 2024 was 0.39% compared to May 2024. The summary of the monthly WPI index changes for the past six months is provided below:

Month Over Month (M-o-M in %) change in WPI Inde

Month-over-Month Change in Major Groups of WPI:

• June 2024 WPI: Primary Articles Index Rises by 2.08%: The index for Primary Articles, which holds a weight of 22.62%, increased by 2.08% to 191.6 (provisional) in June 2024, up from 187.7 (provisional) in May 2024. The rise is attributed to higher prices for food articles (2.96%) and minerals (1.47%). However, prices for non-food articles decreased by 0.32%, and crude petroleum & natural gas saw a decline of 0.57% in June 2024 compared to May 2024.
• Fuel & Power Index Falls by 1.93%: The index for Fuel & Power, which has a weight of 13.15%, decreased by 1.93% to 147.7 (provisional) in June 2024, down from 150.6 (provisional) in May 2024. This decline is due to lower prices for electricity, which fell by 1.67%, and mineral oils, which decreased by 2.38% compared to May 2024.
• Manufactured Products Index Edges Up by 0.14%: The index for Manufactured Products, with a weight of 64.23%, saw a slight increase of 0.14% to 141.9 (provisional) in June 2024, up from 141.7 (provisional) in May 2024. Among the 22 NIC two-digit groups for manufactured products, 8 groups experienced price increases, 10 groups saw price decreases, and 4 groups had no change in prices. Notable groups with month-over-month price increases include food products; chemicals and chemical products; textiles; rubber and plastics products; and motor vehicles, trailers, and semi-trailers. Conversely, groups with price decreases include basic metals; other non-metallic mineral products; fabricated metal products (except machinery and equipment); pharmaceuticals, medicinal chemical, and botanical products; and machinery and equipment.
• Food Index Rises to 190.3: The WPI Food Index, which includes 'food articles' from the Primary Articles group and 'food products' from the Manufactured Products group, increased from 185.7 in May 2024 to 190.3 in June 2024. The annual year-over-year inflation rate based on the WPI Food Index rose from 7.40% in May 2024 to 8.68% in June 2024.

Overall Conclusion on WPI and CPI for June 2024

In June 2024, both the Wholesale Price Index (WPI) and Consumer Price Index (CPI) reflected inflationary trends in India's economy. The WPI registered a modest month-over-month increase of 0.39%, with an annual inflation rate of 3.36%, driven by rising prices of food articles, manufactured food products, and minerals, despite decreases in non-food articles, crude petroleum, and natural gas. The Fuel & Power index saw a significant decline of 1.93% due to falling electricity and mineral oil prices. The Food Index within the WPI rose from 185.7 in May to 190.3 in June, pushing annual food inflation from 7.40% to 8.68%.

Concurrently, the CPI, which measures retail inflation, also indicated increasing price pressures on consumers. The rising costs of essential commodities, especially food items, contributed significantly to both wholesale and retail inflation. The data highlights ongoing inflationary pressures in the economy, impacting both producers and consumers.

(* Tables and Image source used for CPI are from Ministry of Statistics & Programme Implementation / and same as for WPI is sourced from Ministry of Commerce & Industry)