NEW DELHI: Two days after headline retail inflation registered a record low of 1.54 per cent, June wholesale inflation data released on Friday showed wholesale price index (WPI)-based inflation has slipped to its lowest level this year, at 0.9 per cent. WPI inflation was 2.17 per cent in May.
According to retail inflation data released on Wednesday, consumer price index-based inflation fell to 1.54 per cent in June.
The fact that inflation, both retail and wholesale, has touched their lowest levels explains the relatively lower prices of fruits and vegetables in the market. Among the reasons for the price crash is oversupply as a result of bumper production in winter. While consumers would have loved the low-price scenario to continue, the flipside is that farmers, who are forced to sell their produce at lower prices, will not be able to recover their costs.
According to commerce ministry data, the prices of food articles contracted 3.47 per cent in June on a yearly basis. In comparison, vegetable prices fell sharply by 21.16 per cent in June.Experts, however, say things will turn around. “We expect WPI inflation to revert to the 2.75-3 per cent range by March 2018,” said Kotak Economic Research.
Low inflation has also given enough reason for the corporates to demand that the Reserve Bank of India cut rates in the next monetary policy meeting scheduled on August 1-2. “CII strongly recommends a rate cut of 50 basis points in the forthcoming monetary policy to provide a fillip to demand,” said CII director-general Chandrajit Banerjee.
“Ficci feels there is a clear case for the central bank to consider moving to an accommodative stance and introducing a rate cut by at least 50 basis points in the upcoming policy review or even earlier,” said Ficci president Pankaj R Patel.