The wholesale inflation data comes after the statistics ministry reported on June 12 that headline retail inflation in May fell to a 25-month low of 4.25 percent.
Wholesale prices in India fell further into the deflationary zone in May, according to data issued by the commerce ministry on June 14. Inflation in the Wholesale Price Index (WPI) decreased to -3.48 percent in May, down from -0.92 percent in April, with a positive base effect once again playing a prominent role.
- The current WPI inflation figure of -3.48 percent is the lowest in seven and a half years. The last time wholesale inflation was less than 3% was in November 2015, when it was -3.68 percent.
- The wholesale inflation figures come after the statistics ministry reported on June 12 that headline retail inflation in May fell to a 25-month low of 4.25 percent.
Not only did wholesale prices fall year on year in May, resulting in the sub-zero inflation print, but they were also lower compared to April, with the WPI’s all-commodity index falling 0.9 percent. This is the index’s greatest drop in five months.
- However, for the first time since December 2022, all three major WPI groupings — primary goods, gasoline and power, and manufactured products — saw their indices fall from April.
- The highest loss was in fruits (-4%) and vegetables (-2.6%) among primary articles, whose index was down 1.1 percent month on month.
The manufactured products index, which accounts for approximately two-thirds of the total WPI, fell by 0.4 percent. The highest month-on-month reduction in this category was in edible oils, which fell 3.6 percent.
Input price increases helped push up Consumer Price Index (CPI) inflation last year, and while they have subsequently eased, retail inflation still has some way to go.
While CPI inflation declined to 4.25 percent in May, the Reserve Bank of India (RBI) forecasts it to average 4.6 percent in April-June before rising to 5.2 percent in January-March 2024, as the favourable base impact fades.
- The RBI has held the policy repo rate at 6.5 percent since April, awaiting the full impact of its 250 basis point rate hikes.
- Although inflation has slowed, experts predict that growth will suffer in the next months as well.
As a result, the RBI’s monetary policy committee may be forced to begin decreasing interest rates in early 2024.
Look at more info: https://learningsharks.in/
Follow us on insta” http://learningsharks/