The year-on-year (y-o-y) inflation for the WPI Index recorded a broad-based fall to a series-low -4.95% in August 2015, with all the major sub-indices recording a y-o-y disinflation for the second month in a row. Inflation related to non-food manufactured products (core inflation) stood at a series-low 1.9% in August 2015.

Despite the depreciation of the Rupee relative to the US Dollar, the index level for non-food manufactured products eased by 0.4% in August 2015 in month-on-month (m-o-m) terms, led by a fall in global commodity prices and the pass-through of the same to domestic prices of finished products.

Despite the worsening deficit in monsoon rainfall, wholesale primary food inflation remained stable at -1.1% in August 2015 (-1.2% in July 2015). In line with the seasonal hardening observed in the past years, food prices rose by 2.6% in m-o-m terms in August 2015, led by onions, fruit and pulses.

Commenting on WPI numbers, rating agency ICRA said, ''While global commodity prices remain benign, there may be some lagged pass-through of the depreciation of the Rupee relative to the US dollar in the ongoing month. For instance, although the average price of the Indian crude oil basket remains steady in USD terms so far in September 2015 as compared to ~USD 48 a barrel in August 2015, it has risen marginally in INR terms. Nevertheless, the reduction in retail prices of various fuels effected at the beginning of September 2015 would dampen the fuel & power sub index in the ongoing month.

Benefitting from the surplus rainfall in June 2015, planting has been completed on 96% of the normal area sown under kharif crops and an area that is 2% larger than in 2014.

However, this may be disguising the adverse impact of the growing deficit of monsoon rainfall (16% below long period average as on Sept. 13, 2015) on crop yields, which will become clearer upon the release of the Advance Estimates for kharif production that is expected in the next fortnight. Nonetheless, the weakness in commodity prices suggests that WPI inflation will remain sub-zero in Q3FY16."