Wholesale price inflation slowed to a 11-month low of 0.90% in June due to subdued food inflation and weak manufacturing prices, according to data released by the Ministry of Commerce on Friday.
This comes at a time when retail inflation for June slowed to 1.54%, below the lower tolerance level set by the Reserve Bank of India. Growth in the Wholesale Price Index slowed for the fourth consecutive month in June from the 5.51% registered in February. The last time it was below 1% was in July 2016, when it was at 0.63%.
While growth in the primary articles category in the WPI contracted 3.86% in June, the food articles segment within this contracted 3.47%. The corresponding numbers for the previous month were showed a contraction of 1.79% and 2.27% for the two segments, respectively.
“Both wholesale and retail prices data released this week report a broad-based moderation in prices,” Pankaj R Patel, President of Ficci said. “Food inflation has softened considerably over the past couple of months and the outlook for prices is also benign.”
The composite food index within the WPI, combining the values of food items in the primary articles category and manufactured food items, contracted 1.25% in June compared with a growth of 0.15% in the previous month.
Inflation in the manufactured products category came in at 2.27% in June, the slowest it has been since November 2016. The fuel and power saw a drastic easing of inflation to 5.28% in June from 11.7% in the previous month.
“The continuous easing of the WPI inflation print over the last few months, culminating in prices touching a record low in June 2017, reflects a paradigm shift towards an era of benign inflation,” Chandrajit Banerjee, Director General of CII said. “The declining inflation scenario, which has been undershooting the central bank’s inflation target by a large margin, should induce the RBI to resume its rate easing cycle. CII strongly recommends a rate cut of 50 basis points in the forthcoming monetary policy to provide a fillip to demand.”
