India’s Wholesale Price Inflation Cools Further In May

Wholesale inflation cooled further in May due to softening of petroleum prices.

This comes even as India’s consumer price index inched up to a seven-month high.

Inflation measured by the Wholesale Price Index fell to 2.45 percent in May from 3.07 percent in the previous month, according to data released by the Ministry of Commerce. A Bloomberg poll of economists had estimated the WPI inflation, which tracks changes in the price of goods before they are sold by retailers, at 3.03 percent.

The fall was led by a 7.85 percent decline in the wholesale prices of crude and petroleum. While most other vegetables grew expensive, prices of potatoes fell over 23 percent during the month on a yearly basis.

India’s retail inflation rose to 3.05 percent in May on account recovering prices of vegetables. Despite the pick-up, the CPI inflation remains below the Reserve Bank of India’s target of 4 (+/-2) percent.

That, coupled with a lower-than-expected wholesale inflation, leaves room for the Monetary Policy Committee to cut rates further.

Key Highlights

• Primary articles inflation stood at 6.16 percent in May 2019 from 3.3 percent in April.
• The food article index rose 6.99 percent compared to 3.4 percent .
• Fuel and power inflation was at 0.98 percent compared to 0.5 percent.
• Manufactured products inflation was at 1.28 percent compared to 0.2 percent.