WPI inflation in May cools to 5-month low of 2.17%

Inflation based on the wholesale price index fell to a five-month low of 2.17% in May, mainly because of a sharp drop in prices of vegetables.

Inflation based on the wholesale price index fell to a five-month low of 2.17% in May, mainly because of a sharp drop in prices of vegetables.

Traders and vendors negotiate prices of vegetables at a wholesale vegetable market in Hyderabad. (AFP)

In December, the reading was 2.10%.

WPI inflation was 3.85% in April and (-)0.9% in May 2016.

Pulses and cereals saw a slower growth in prices.

The wholesale price index (WPI) for the month is based on the new base year 2011-12, which was revised last month from 2004-05, with an aim to reflect the macroeconomic picture more accurately.

The slowdown in wholesale inflation comes against the backdrop of retail inflation easing to a multi-year low of 2.18% in May.

Government data showed that prices of food articles shrank by 2.27% in May on an yearly basis.

The inflation print for vegetables read (-)18.51 %. While potato saw a deflation of 44.36 %, for onion, it came in at 12.86 %.

The rate of price increase was 4.15 % in cereals, down from 6.67 % in May last year. Protein-rich pulses turned cheaper in May as prices fell by 19.73 %.

Eggs, meat and fish saw a price decline of 1.02 % annually.

The index basket of the new series has a total of 697 items, including 117 for primary articles, 16 for fuel and power and 564 for manufactured products.

There was acceleration in prices of fuel and power (11.69 %) and manufactured products (2.55 %).

However, the price rise in sugar, which falls under the category of manufactured items, slowed to 12.83 % in May, from 23.12 % a year earlier.