WPI inflation: Wholesale price-based inflation slipped to about two-year low at 2.45 per cent (provisional) in May compared to 3.07 per cent (provisional) for the previous month and 4.78 per cent during the corresponding month of the previous year. The major fall in inflation has been due to falling prices of food articles, fuel and power items, says official data released on Friday.
"The official WPI for all commodities for May rose by 0.2 per cent to 121.2 (provisional) from 120.9 (provisional) for the previous month," the statement said. Inflation in food articles basket was 6.99 per cent, down from 7.37 per cent in April. In this category, the index remained unchanged at its previous month level of 150.1, while 'non-food articles' group rose by 0.9 per cent to 127.8 (provisional) due to higher prices, said the statement. In fuel and power, the index rose by 0.6 per cent to 103.4 from 102.8 for the previous month, while the manufactured products' index rose by 0.1 per cent to 118.4 (provisional) from 118.3 (provisional) for the previous month. "The rate of inflation based on WPI food index consisting of 'food articles' from primary articles group and 'food product' from manufactured products group increased from 4.95 per cent in April, 2019 to 5.10 per cent in May, 2019," it added.
However, onion prices spiked during the month with inflation at 15.89 per cent, as against (-) 3.43 per cent in April. Vegetables inflation eased to 33.15 per cent in May, down from 40.65 per cent in the previous month. Inflation in potato was (-) 23.36 per cent, against (-) 17.15 per cent in April.
Inflation in 'fuel and power' category cooled to 0.98 per cent, from 3.84 per cent last month. Manufactured items too saw decline in prices with inflation at 1.28 per cent in May, against 1.72 per cent in April. WPI inflation data for March has been revised downwards to 3.10 per cent from provisional 3.18 per cent. Data released earlier this week showed retail inflation spiked to a 7-month high of 3.05 per cent in May on costlier vegetables, and protein-rich items.
The Reserve Bank, which mainly factors in retail inflation for monetary policy decision, on June 6, lowered its benchmark lending rate to a nearly 9-year low of 5.75 per cent, even as it upped its inflation projection to 3-3.1 per cent for the first half of 2019-20. Flagging uncertain monsoon, unseasonal spike in vegetable prices, crude oil prices, financial market volatility and fiscal scenario as risks to inflation, the RBI projected upward bias in food inflation in near term.
Manoj Sharma with agency inputs