The Wholesale Price Index (WPI)-based inflation dropped to 4.7 per cent in May coming at the back of falling prices of manufactured items even though food prices continued to increase. WPI inflation was 4.89 per cent in April while it was 7.55 per cent in May last year.
WPI inflation in the manufactured items fell to 3.11 per cent in May as against 3.41 per cent in April. Inflation in the non-food articles category dropped to 4.88 per cent from 7.59 per cent a month ago. Inflation in food items increased sharply from 6.08 per cent in April to 8.25 per cent in May. Food articles comprise 14.34 per cent of WPI. Rise in food prices was due to higher prices of onions, vegetables, cereals and protein-based items.
Deputy Chairman of Planning Commission Montek Singh Ahluwalia expected food prices to decline in the long-term period. “If you look at the components of inflation, the food prices increase has slightly gone up. This is the base level effect I was referring to earlier...Inflation is softening. I think the number is lower than it was last year. The good news is that the non-food inflation has really gone down much more than you thought it would. I think the base level effect will wear out in the years ahead,” Ahluwalia said.
Inflation in vegetables was 4.85 per cent in May as compared to (-) 9.05 per cent in April. Onion prices were high at 97.40 per cent in May as against 91.69 per cent a month ago. Inflation for March was revised down to 5.65 per cent from 5.96 per cent as per provisional estimates.
The WPI figures released on Friday showed that inflation in egg, meat and fish stood at 11.21 per cent during May as against 10.44 per cent in April. Inflation in wheat, however, moderated to 12.65 per cent in May as compared to 13.89 per cent in April. Potatoes witnessed a drop in prices from (-) 2.42 per cent in April to (-) 3.44 per in May while pulses fell sharply and stood at 5.95 per cent in May.
Quick-fixes cannot solve eco worries: FM
Meanwhile, Finance Minister P Chidambaram said temporary economic problems cannot be solved by “quick-fixes” and the government will continue to take measures with long-term perspective to deal with them.
“The government will announce steps by the end of this month or next month to boost investment and growth.”
“The temporary problems that we face cannot be solved by quick-fixes, it can only be solved by continuing to take long term measures,” he said.
