WPI inflation falls sharply as food prices ease

NEW DELHI: As prices of food articles, including vegetables, declined,  the wholesale price index (WPI)-based inflation eased sharply to its lowest level this year to 0.9 per cent in June from 2.17 per cent in May.

The slowdown in wholesale inflation comes against the backdrop of retail inflation easing to a record low of 1.54 per cent in June, reports suggested.

The WPI figure is at the lowest level in at least eight months — since the availability of data for the new 2011-12 base year series.

The government data released on Friday showed that prices of food articles contracted by 3.47 per cent in June on a yearly basis. Vegetable inflation stood at (-)21.16 per cent.

Potato saw a maximum deflation of 47.32 per cent, followed by pulses at 25.47 per cent. For onion, deflation was 9.47 per cent in June.

The rate of price increase was 1.93 per cent in cereals while that of protein-rich items like egg, meat and fish was 1.92 per cent in June.

Fuel and power segment saw some cooling of inflation at 5.28 per cent, from 11.69 per cent in May. Manufactured product inflation read 2.27 per cent.

Soon after retail inflation hit a record low, Chief Economic Advisor Arvind Subramanian had said there had been a “paradigm shift” in inflation trajectory and that has been “missed by all”.

His comments were seen as an apparent reference to the decision of the Monetary Policy Committee, chaired by RBI Governor Urjit Patel, which has kept the key policy rate unchanged so far this year citing pricing pressures.

Besides, industrial production data showed that the growth in factory output slumped to 1.7 per cent in May, from 8 per cent a year ago.

WPI inflation is calculated on the basis of 2011-12 as the base year. It was revised in May from 2004-05 with an aim to reflect the macroeconomic picture more accurately.

The index basket of the new series has a total of 697 items, including 117 for primary articles, 16 for fuel and power and 564 for manufactured products.

The final print of April WPI inflation remained unchanged at 3.85 per cent.

The rate of price increase was 1.93 per cent in cereals

Potato saw a maximum deflation of 47.32 per cent

With agency inputs

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