INFLATION

India's wholesale price index falls to 2.17% in May

kolkata-food-inflation For the first time since January 2012, food prices saw deflation in May and the prospect of good monsoon rains is likely to keep food inflation in check | File

India's annual rate of inflation based on wholesale prices decelerated last month to 2.17 per cent from 3.85 per cent reported for April, as prices of food articles eased, official data showed on Wednesday.

According to data furnished by the Ministry of Commerce and Industry, the wholesale price index (WPI) with the revised base year of 2011-12 in May, 2016 had declined to (-) 0.90 per cent.

The new figures come in the backdrop of Monday's retail inflation figures that had slumped to record low of 2.18 per cent in May driven by sharp drop in kitchen staples like vegetables and pulses, strengthening government's case for lowering of interest rate by RBI.

For the first time since January 2012, food prices saw deflation in May (-1.05 per cent) and the prospect of good monsoon rains is likely to keep food inflation in check.

Inflation apart, industrial output too slipped to 3.1 per cent in April from 6.5 per cent a year ago, possibly because of lagged impact of demonetisation, government data showed today.

The worst performing sectors in April were manufacturing, capital goods and consumer durables.

The Consumer Price Index (CPI) based inflation strengthened the finance ministry's stand that Reserve Bank of India's forecast on price rise had large errors and there was a case for cutting interest rate to help private investments to pick and boost economic growth.

Retail inflation was the lowest since the government started publishing a wider CPI data in 2012.

Consumer prices rose 2.99 per cent on year in April and 3.81 per cent in March.

Clothing, housing, fuel and light also saw lower inflation rate in May while prices of vegetables declined by 13.44 per cent and that of pulses and products by 19.45 per cent.

Earlier this month, RBI left key interest rate unchanged as it wanted to be more sure that inflation will stay subdued. This left finance ministry fuming as it felt that inflation was consistently low warranting a rate cut.

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Topics : #Inflation | #RBI

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