August Inflation Data: Wholesale inflation is coming down in the country; But on which side the retail inflation figures is going to sit?

Indian consumers have definitely got relief due to lower wholesale inflation, but the suspense remains on what will be the retail rate. The CPI (Consumer Price Index) is still far above the inflation band of 2-6 per cent set by the RBI.

According to a Bloomberg report, the last decade has seen little simultaneous decline in wholesale inflation and retail inflation. In the longer term, there has been an inverse relationship between wholesale inflation and retail inflation for most of the time. Analysts attribute this to the ability of the companies to decide the price. 

According to the Bloomberg survey conducted among economists till September 10, the retail inflation rate can go up to 6.9 percent in the data to be released today. On the other hand, wholesale inflation may fall for the third consecutive month to 12.9 percent. Wholesale inflation data can be released on Wednesday.

Companies increased prices

Due to the increase in commodity prices, many companies including Hindustan Unilever, ITC, Maruti Suzuki Limited have increased the prices of their products in the last few months. However, even after this, many companies could not meet the increased cost with this price hike. Due to this, there was a decrease in the profits of the companies in the April-June quarter. 

Even after narrowing the gap between WPI and CPI, companies are not passing on the shortfall in commodity prices to retail customers, but are using it to increase their margins. 

Inflation will take time to come down

Experts believe that it will take time for inflation to come into the band set by the RBI. Since May, the RBI has so far increased the repo rate by 1.40 percent. Inflation may average 6.7 percent this year.