India's wholesale inflation accelerates to 9.92% in August from 9.78% in July

India's wholesale inflation increased to 9.92% in August, up from 9.78% in July, according to government data released on Monday. This figure has hovered around 10% for the past four months, with food inflation rising to 7.05% in August from 6.65% in the previous month. The Wholesale Price Index (WPI) inflation figure for June was revised upward to 9.97% from the earlier estimate of 9.87%.

Inflation in primary articles decreased to 7.76% in August from 8.52% in July, while fuel and power inflation surged to 22.93% from 20.05%. Manufactured products' inflation remained steady at 8.37%, compared to 8.29% in July. Petroleum and natural gas prices experienced a sharp increase of 34.41% year-on-year in August, following a 26.99% rise in July.

The consumer inflation data for August is expected to be released later today. Consumer inflation is anticipated to have increased to a 20-month high in August, driven by rising food and fuel prices, surpassing the Reserve Bank of India's (RBI) 4% medium-term target for the third consecutive month, as indicated by a Reuters poll.

Despite inflation staying within the RBI's 2%-6% target band, the central bank maintained interest rates last month, although the minutes of the latest meeting suggested the bank was prepared to tighten policy if inflationary pressures expanded. The bank is not expected to raise rates until next year.

Various factors, such as an erratic monsoon affecting food supplies, driving up prices of essentials like sugar, cereals, milk, edible oils, eggs, and meat, as well as global crude prices nearing $108 a barrel and higher cooking gas prices, contributed to inflation pressures. India's ban on sugar exports, aimed at curbing domestic prices, began in May and will continue until the end of September.

A separate Reuters poll conducted last month projected that the RBI would increase the policy rate by 25 basis points in the second quarter of 2027, followed by another increase in the fourth quarter, raising the policy rate to 5.75%. RBI Governor Sanjay Malhotra, speaking at the Reserve Bank of India's (RBI) August monetary policy meeting held between August 3 and 5, acknowledged the possibility of policy rate tightening in the third quarter if higher food and fuel prices led to a broad-based increase in inflation, de-anchoring of inflation expectations, or persistent inflation.