Business Economy

WPI inflation eases to near two-year low

Wholesale price-based inflation declined for the second consecutive month to its 23-month low of 2.02% in June, helped by decline in prices of vegetables as well as fuel and power items, according to official data released on Monday.

The Wholesale Price Index (WPI)-based inflation was at 2.45% in May. It was 5.68% in June 2018.

Inflation in food articles basket eased marginally to 6.98% in June, from 6.99% in May.

Vegetable inflation softened to 24.76% in June, down from 33.15% in the previous month. Inflation in potato was (-) 24.27% , against (-) 23.36% in May.

However, onion prices continued the rising trend with inflation at 16.63% during the month, as against 15.89% in May.

WPI inflation in June is the lowest in 23 months, since July 2017, when it was at 1.88%.

Inflation in ‘fuel and power’ category cooled substantially to (-)2.20%, from 0.98% last month. Manufactured items too saw decline in prices with inflation at 0.94% in June, against 1.28% in May.

WPI inflation data for April has been revised upwards to 3.24% from provisional 3.07%.

Data released earlier this week showed that retail inflation spiked to a six-month high of 3.18% in June, on costlier food items.

The Reserve Bank, which mainly factors in retail inflation for monetary policy decision, on June 6, lowered its benchmark lending rate to nearly a nine-year low of 5.75%, even as it upped its inflation projection to 3-3.1% 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.

Source: thehindu.com

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