The Wholesale Price Index (WPI) inflation dropped to its lowest level in 14 months, reaching 0.39 per cent in May, driven by lower food and fuel costs, with experts cautioning about potential price increases due to geopolitical conflicts.The WPI inflation showed a decrease from April’s 0.85 per cent and was significantly lower than May last year’s 2.74 per cent.The industry ministry issued a statement explaining that May’s positive inflation primarily resulted from “increase in prices of manufacture of food products, electricity, other manufacturing, chemicals and chemical products, manufacture of other transport equipment and non-food articles”.
- The WPI data revealed that food articles experienced a deflation of 1.56 per cent in May, compared to April’s 0.86 per cent deflation, with negative inflation observed in vegetables, onion, potato and pulses.
- The vegetable sector witnessed a deflation of 21.62 per cent in May, up from April’s 18.26 per cent.
- The fuel and power sector recorded a deflation of 2.27 pc in May, contrasting with April’s 2.18 per cent inflation.
- Manufactured products maintained positive inflation at 2.04 per cent, though lower than April’s 2.62 per cent.
The Reserve Bank of India (RBI) primarily considers retail inflation for its monetary policy decisions.Recent data indicated retail inflation fell to a six-year low of 2.82 per cent in May, largely due to reduced food prices.The Reserve Bank of India implemented a significant reduction in benchmark policy interest rates by 0.50 per cent to 5.50 per cent this month, considering the declining inflation trends.The central bank revised its inflation forecast downward to 3.7 per cent for the ongoing fiscal year, compared to its previous estimate of 4 per cent, anticipating stable core inflation due to reduced international commodity prices.The current retail inflation projection, averaging below 4 per cent, stands at its lowest point in recent history.
