India's wholesale price-based inflation cooled for the second consecutive month to 11.16% in July as food turned cheaper even though prices of manufactured goods and crude oil hardened.

However, wholesale price index (WPI) based inflation remained in double digits for the fourth straight month in July, mainly due to a low base of last year. WPI inflation was (-) 0.25% in July 2020.

WPI inflation had moved to double digit in April at 10.74% and then climbed to a record high of 13.11% in May. In June, it eased to 12.07%.

"The high rate of inflation in July 2021 is primarily due to low base effect and rise in prices of crude petroleum and natural gas; mineral oils; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year," the Commerce and Industry Ministry said in a statement.

Food inflation eased for the third straight month and was at 0% in July, down from 3.09% June, even as onion prices spiked. Inflation in onions was high at 72.01%.

Inflation in crude petroleum and natural gas was 40.28% in July versus 36.34% in June.

In manufactured products, inflation rose to 11.20% in July from 10.88% in June.

Aditi Nayar, chief economist at ICRA, expects the core-WPI inflation to have peaked at 10.8% in July 2021.

“The rapid rise in the core-WPI inflation from August 2020 onwards as well as the impact of concerns related to the Delta plus variant on commodity prices are likely to gradually soften the core prints going ahead,” she said.

The wholesale food index is expected to record a mild inflation in August as rising tomato prices pose some concern, before slipping into disinflation for the next few prints, aided by the base effect.

The headline WPI inflation is expected to remain in double-digits until October 2021, and therefore its softening over the last two months is unlikely to provide any material comfort to the monetary policy committee, Nayar added.

Last week, the National Statistical Office (NSO) released data showing retail inflation easing to a three-month low of 5.59% in July, mainly due to moderation in food prices.