WPI records 4.5-year low with 3.21% deflation, food prices high

In May, both fuel and manufactured price inflation turned negative because of falling crude oil prices and companies losing pricing power amid a fall in demand, respectively. Food inflation also eased to 1.13% in May from 2.55% in the preceding month.

India’s inflation based on the wholesale price index contracted by 3.21% in May, slipping into negative territory first time in four years.

An employee seen at work at an aluminum die-casting manufacturer company in sector 57, Noida. (Photo by Sunil Ghosh / Hindustan Times)

In May, both fuel and manufactured price inflation turned negative because of falling crude oil prices and companies losing pricing power amid a fall in demand, respectively. Food inflation also eased to 1.13% in May from 2.55% in the preceding month.

The National Statistical Office on Friday did not release the headline retail inflation data, based on consumer price index, for May citing lack of information. However, it said retail food inflation in May was at 9.28%, compared to 10.5% a month ago.

The increase in petrol and diesel prices for the ninth consecutive day on Monday is expected to push retail inflation higher in June.

However, as the Reserve Bank of India (RBI) is focusing on reviving economic activity in the country, most analysts expect the central bank to further cut policy rate.

While urban retail food inflation was at 8.36% in May, that of rural areas was 9.69% in the previous month.