Increasing food prices, especially unprecedented increase in prices of onion have contributed to inflation over the past few weeks.

After registering considerable decline since the start of this year, India’s wholesale price index (WPI) jumped to 4.9 per cent in June. In the previous month, WPI was recorded at 4.7 per cent.

The jump in WPI was mainly due to increase in food prices, which increased from 8.3 per cent in May to 9.7 per cent in June.

While prices of potato and fruits dropped year-on-year 14.2 per cent and 0.4 per cent, respectively, in June, prices of onion jumped more than 100 per cent year-on-year in June, driving food inflation notably up.

Core inflation (non-food manufactured inflation) slipped to 2 per cent – its lowest level in more than three years.

Analysts are of the view that a good monsoon this year would lead to a good kharif crop, which would help bring food prices down.

In its most recent report, Anand Rathi Institutional Research said, “A normal monsoon this year is expected to lead to a good kharif crop. This would ease the pressure on food prices. The fall in global commodity prices would also help reduce imported inflation.”

But, a recent sharp depreciation in value of the rupee against the U. S. dollar could thwart India’s hope to benefit from any decline in global prices of commodities.