NEW DELHI: The wholesale price-based inflation rate tumbled to a seven-and-half-year low of (-) 3.48% in May on easing prices of food, fuel and manufactured items, strengthening the case for the RBI to continue with the rate hike pause in the current fiscal. This is the second straight month when WPI has been in the negative zone, mainly due to a higher base and falling prices of fuel and manufactured goods. Food prices also eased during May.
A negative WPI inflation, technically termed deflation, means overall wholesale prices have been falling year-on-year. The wholesale price index (WPI) comes within days after the government data showed retail inflation, closely tracked by the RBI to decide on monetary policy, dipped to a 25-month low of 4.25%in May. The fall in the WPI-based inflation rate is usually reflected in retail inflation data with a time lag.