Wholesale inflation dropped below 2 percent for the first time in four months, owing to easing commodity prices and food prices.

India’s wholesale inflation declined to 1.31 percent in August compared with 2.04 percent in the previous month, according to data released on September 17.

The trajectory of wholesale prices has again diverged from consumer inflation, which rose to 3.65 percent from 3.6 percent earlier.

Sticky food inflation, especially in vegetables, pulses, and cereals, and an uptick in service inflation contributed to the faster pace of rise in prices of the consumer basket.

Wholesale inflation is likely to dip further if crude prices remain at current levels. Brent crude prices have been hovering near a three-year low of $70. An earlier analysis by Moneycontrol showed that lower crude oil prices for longer period could upend the government's fiscal math, as it could lead to lower nominal growth than earlier projected.

A $10 decrease in crude oil leads to a 50-bps or 0.5 percentage point decline in the wholesale price index, constituting nearly 60 percent of the GDP deflator.