The country's wholesale price index (WPI) inflation continued to remain in the negative terrain for the second consecutive month in May. The WPI-based inflation for May declined to the lowest level since November 2015. Declining for the 12th consecutive month, the WPI inflation in May stood at -3.48% as against -0.92% recorded in April.
The government has attributed the decline in the rate of WPI inflation to a fall in prices of mineral oils, basic metals, food products, textiles, non-food articles, crude petroleum & natural gas, and chemical & chemical products.
Wholesale inflation for manufactured products declined to -2.97% in May from -2.42% in April. Wholesale inflation for food products declined from 0.17% in April to -1.59% in May. Wholesale inflation for fuel and power stood at -2.62% in May as against -2.43% in April.
The month-over-month change in WPI for May stood at -0.86% as compared to April. For manufacturing products, WPI declined by 0.35% to 140.7 in May from 141.2 in April. WPI for food products decreased from 173.6 in April to 172.8 in May. WPI for fuel and power declined by 2.62% to 148.6 in May from 152.6 in April. Prices of Coal (-0.67%), Mineral Oils (-2.01%) and Electricity (-5.46%) declined in May as compared to April.
The Department for Promotion of Industry and Internal Trade (DPIIT) releases index numbers of wholesale prices in India on a monthly basis on the 14th of every month with a time lag of two weeks of the reference month, and the index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.
Earlier this week, the country’s retail inflation which is measured by the All-India Consumer Price Index (CPI), hit a 25-month low of 4.25% in May compared with 4.7% in April. The CPI-based inflation has remained within the Reserve Bank of India's (RBI) target limit of 4% to 6% for the third straight month. Retail inflation in March stood at 5.66%, whereas it stood at 6.44% in February.
Last week, the monetary policy committee (MPC) of the Reserve Bank of India (RBI) reduced its inflation forecast for 2023-24 to 5.1% from 5.2% projected earlier. Assuming a normal monsoon, CPI inflation in Q1 is projected at 4.6%, Q2 at 5.2%, Q3 at 5.4% and Q4 at 5.2%, the MPC said, adding it has decided to remain focused on 'withdrawal of accommodation' to ensure that inflation progressively aligns with the target while supporting growth.
"The headline inflation trajectory is likely to be shaped by food price dynamics. Wheat prices could see some correction on robust mandi arrivals and procurement. Milk prices, on the other hand, are likely to remain under pressure due to supply shortfalls and high fodder costs," the MPC said.