Sliding down to 23 month low, WPI based inflation settles at 2.02%, helped by decline in prices of fuel, vegetables

Post retail inflation reports covered the market, settling at 3.18 per cent for the month of June 2019, the wholesale price-based inflation has declined for the second consecutive month to its 23 month low of 2.02 per cent. This is helped by decline in prices of vegetables as well as fuel and power items.

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The Reserve Bank, which mainly factors in retail inflation for monetary policy decision, on June 6, lowered its benchmark lending rate to nearly a nine-year low of 5.75 per cent, even as it upped its inflation projection to 3 to 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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While WPI inflation in June is the lowest in 23 months, since July 2017, when it was at 1.88 per cent, data released earlier this week showed that retail inflation spiked to a six-month high on costlier food items. However the wholesale inflation was at 2.45 per cent in May and 5.68 per cent in June 2018.

Meanwhile, inflation in fuel and power category cooled substantially to negative 2.20 per cent, from 0.98 per cent last month. Manufactured items too saw decline in prices with inflation at 0.94 per cent in June, against 1.28 per cent in May.


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