WPI inflation drops to 0.90%, an 8-month low in June

The Dollar Business Bureau

Inflation based on Wholesale price index (WPI) fell to 0.90% in June, lowest in eight months as the prices of food commodities and manufactured goods declined.

Inflation was 2.17% in May 2017 and (-) 0.09% in June last year, according to the official data released by the Commerce Ministry on Friday.

“Build up inflation rate in the financial year so far was -0.44% compared to 3.71% in the corresponding period of the previous year, it said.

The prices of major food items such as vegetables, potatoes and pulses witnessed a sharp decline in the month. The prices of potato, pulses and vegetables dropped by 47.32%, 25.47% and 21.16%, respectively.

The sharp decline in food items prices last month could be due to the agitation by farmers across various parts of Rajasthan and Madhya Pradesh, where farmers have been complaining of deteriorating income as a result of a sharp decline in the prices of crops.

However, onion prices dropped at a slower pace of 9.47% in June 2017 compared to 39.52% fall seen in the same month last year.

The rate of increase in cereals price was 1.93% whereas protein-rich items such as egg, meat and fish witnessed 1.92% inflation in June.

The manufactured items section, which accounted for around 65% weightage in the index, recorded a price rise of 2.27% in the said month as compared to 2.55% in the previous month.

The segment of fuel and power saw some easing of inflation in June at 5.28%, from 11.69% in May. The inflation for the manufactured products was 2.27%.

In addition, industrial production data indicated that factory output growth declined to 1.7% in May, from 8% in the same month a year ago.

The WPI figures for June represent second time that it is being calculated based on the new series with 2011-12 as the base year. It was revised from the base year 2004-05 in May with an aim to bring about a more accurate macroeconomic picture.

The index basket of the revised series has 697 items in total, comprising 117 for primary items, 564 for manufactured products and 16 for fuel and power.