By Mukesh Jagota
Deflation in wholesale prices continued for the third month in a row in June, with the relevant index falling to a nearly eight-year low at (-) 4.12%, according to official data released Friday.
The fall in wholesale inflation rate is owing to a steep fall in prices of fuel, power, food, base metals and the high base of last year.
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It is the 13th straight month of decline in wholesale price index (WPI) inflation and it is expected to continue for a few more months as the base effect will remain favourable. WPI rate was well above 10% till September 2022 before its descent began. In May, the WPI was down 3.48% on year.
“Higher base effect and collapse of commodity price both have resulted in WPI remaining in a contractionary phase,” senior analyst at India Ratings and Research Paras Jasrai said.
Food Index, which has a weight of 24.38% in overall Wholesale Price Index, was (-) 1.24% in June when compared to the same month of last year. June data also shows slight lowering of wholesale inflation in key items of concern like wheat, but in rice and pulses, the substantial increase has been seen. Wholesale prices of vegetables have fallen 21.27% from last year’s level.
India’s retail inflation spurted in June after declining for the previous four months, owing to stiff cereal prices, costlier pulses and sequential rise in vegetable prices. The Consumer Price Index rose 4.81% on-year in June from 4.31% in May, as food inflation went up to 4.49% from 2.96%, official data showed last Monday, dimming the prospects of rate cut by the Reserve Bank of India in the current fiscal. FE