Reflecting the included good’s average price change in May, WPI based inflation slips to 22 month low at 2.45%

After the inside story of the Consumer Price Index based retail inflation went out in open, the Wholesale price based inflation has slipped to 22 month low at 2.45 per cent in May aided by falling prices of food articles, fuel and power items.

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The Reserve Bank, which mainly factors in retail inflation for monetary policy decision, on June 6 had 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.

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The Wholesale Price Index (WPI)-based inflation for the month of April was 3.07 per cent and that it was 4.78 per cent in the month corresponding last year. Further the inflation in food articles basket was 6.99 per cent, down from 7.37 per cent in April.

Vegetables inflation eased to 33.15 per cent in May, down from 40.65 per cent in the previous month where inflation in the potato markets went on to settle negative at 23.36 per cent against that of 17.15 per cent in April.

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A wholesale price index is the one that measures and tracks the changes in the price of goods in the stages before the retail level that is, goods that are sold in bulk and traded between entities or businesses instead of consumers.

Usually expressed as a ratio or percentage, the WPI shows the included goods’ average price change and is often seen as one indicator of a country’s level of inflation.


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