India’s wholesale inflation fell by 2.40% in June, the eight straight month of decline, hammered down by low fuel and commodity prices, prompting industry leaders to press for further cuts in interest rates.
The wholesale price index (WPI)-based inflation, the broadest measure to capture economy-wide price movement of goods, was (-) 2.36% in May, and 5.66% in June last year, latest price data released on Tuesday showed.
Data released Monday showed that India’s retail inflation rate fell to an eight-month high of 5.40% in June from 5.01% in the previous month, dampening hopes of an interest rate cut by the Reserve Bank of India (RBI) in its monetary policy review next month.
Consumer price index (CPI)-based inflation — a metric to measure changes in shop-end prices — acts as the RBI’s main guide on interest rate-related decisions.
“The near static price line and benign inflation outlook should propel the RBI to continue with its rate easing cycle in its forthcoming monetary policy to support investment and consumption demand,” said Chandrajit Banerjee, director-general of Confederation of Indian Industry (CII).
“Lower international commodity prices, especially for metals due to low demand conditions in the rest of the world, have put downward pressure on prices of manufactured products. With China being expected to register growth of not more than 7%, these prices would continue to remain depressed,” credit ratings and research firm Care Ratings said.