Wholesale Price Inflation: A Cooling Economic Indicator

Wholesale price inflation in India declined to 0.39% in May, primarily due to decreased prices in food articles, manufactured products, and fuel. The decline was sharper compared to April's 0.85%. Despite deflation in food and fuel, manufactured products witnessed an inflation rise. Retail inflation also dropped substantially.

The latest government data indicates a significant decline in wholesale price inflation, which has dropped to 0.39% in May. This easing trend is attributed to falling prices of food articles, manufactured products, and fuel.

In April, WPI-based inflation was documented at 0.85%, highlighting a marked decrease. The industry ministry attributes this inflation change to rising prices in specific sectors including food manufacturing, chemicals, and transport equipment.

While manufactured products saw inflation, food, notably vegetables, experienced significant deflation. The Reserve Bank of India, considering these factors, reduced policy interest rates by 0.50% to accommodate the easing inflation.

(With inputs from agencies.)