A massive contraction in food prices dragged down India’s annual rate of inflation based on wholesale prices to extremely low levels in June, official data showed on Friday adding to the clamour for an RBI rate cut.
According to data from the Ministry of Commerce and Industry, the wholesale price index (WPI), with the revised base year of 2011-12, decelerated further in June to 0.90 per cent from 2.17 per cent in May as food prices eased.
“The annual rate of inflation, based on monthly WPI, stood at 0.90 per cent (provisional) for June 2017 (over June 2016) as compared to 2.17 per cent (provisional) for the previous month and (-)0.09 per cent during the corresponding month of the previous year,” the Ministry said.
“Build up inflation rate in the financial year so far was (-)0.44 per cent compared to a build up rate of 3.71 per cent in the corresponding period of the previous year.”
The wholesale prices had decelerated in May to 2.17 per cent from 3.85 per cent reported for April. However, the WPI in June 2016 declined to (-)0.09 per cent.
The base year of the current WPI, which was revised in June from 2004-05 to 2011-12, does not include indirect taxes, thus decreasing volatility in inflation at wholesale level.
On a year-on-year (YoY) basis, expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, declined by (-)3.86 per cent as compared to a rise of 5.68 per cent during the same month a year ago.
The prices of food articles slipped by (-)3.47 per cent during the month under review.
The wholesale inflation rate for onion was lower year-on-year by (-)9.47 per cent, while that for potatoes plunged by (-)47.32 per cent.
Overall, vegetable prices in June declined by (-)21.16 per cent, against a rise of 18.62 per cent in the same month a year ago.
As per the data, on YoY basis, wheat became cheaper by 0.29 per cent, while protein-based food items such as eggs, meat and fish became dearer by 1.92 per cent.
Prices of manufactured products, which comprise nearly 64.23 per cent of the index, rose by 2.27 per cent. The sub-category of manufactured food products registered a rise of 3.09 per cent.
The fuel and power price sub-index inflation accelerated by 5.28 per cent. Segment-wise, the price of high-speed diesel rose by 7.07 per cent during June, while that for petrol climbed by 6.49 per cent, and for LPG by 0.70 per cent.
Official data on Wednesday showed that retail — or consumer price indexed (CPI) — inflation in India during June fell to 1.54 per cent from a higher rate of 2.18 per cent in May.
The retail inflation was dragged lower by a sharp fall in prices of food items like pulses, vegetables and other perishables. The current inflation rate is the lowest since the series began in 2012.
On a year-on-year (YoY) basis, the country’s June retail inflation was lower from 5.77 per cent CPI rate reported for the corresponding month of last year.
“Both wholesale and retail prices data released this week report a broad based moderation in prices. Food inflation has softened considerably over the past couple of months and the outlook for prices is also benign,” said Ficci President Pankaj R. Patel.
“The continuous moderation in prices bodes well for the economy and Ficci feels that there is a clear case for the central bank to consider moving to an accommodative stance and introducing a rate cut by at least 50 basis points in the upcoming policy review or even earlier.”