WPI inflation at nearly 2-year low at 2.45% in May

Wholesale price-based inflation slipped to 22-month low at 2.45 per cent in May helped by falling prices of food articles, fuel and power items, according to an official data released Friday. The Wholesale Price Index (WPI)-based inflation was at 3.07 per cent in April. It was 4.78 per cent in May 2018.

Inflation in food articles basket was 6.99 per cent, down from 7.37 per cent in April.

However, onion prices spiked during the month with inflation at 15.89 per cent, as against (-) 3.43 per cent in April.

Vegetables inflation eased to 33.15 per cent in May, down from 40.65 per cent in the previous month. Inflation in potato was (-) 23.36 per cent, against (-) 17.15 per cent in April.

WPI inflation in May is the lowest in 22 months, since July 2017, when it was at 1.88 per cent

Inflation in ‘fuel and power’ category cooled to 0.98 per cent, from 3.84 per cent last month. Manufactured items too saw decline in prices with inflation at 1.28 per cent in May, against 1.72 per cent in April.

WPI inflation data for March has been revised downwards to 3.10 per cent from provisional  3.18 per cent.

Data released earlier this week showed retail inflation spiked to a 7-month high of 3.05 per cent in May on costlier vegetables, and protein-rich items.

The Reserve Bank, which mainly factors in retail inflation for monetary policy decision, on June 6, lowered its benchmark lending rate to a nearly 9-year low of 5.75 per cent, even as it upped its inflation projection to 3-3.1 per cent for the first half of 2019-20.

Flagging uncertain monsoon, unseasonal spike in vegetable prices, crude oil prices, financial market volatility and fiscal scenario as risks to inflation, the RBI projected upward bias in food inflation in near term.