NEW DELHI:The Wholesale Price Index (WPI) continues to be in the negative zone for the seventh consecutive month in May, although prices fell at a slower rate of (-) 2.36 per cent as against the previous month, mainly on the back of plunging oil and manufacturing goods prices.
Protein rich items like egg, meat and fish too were cheaper in May as compared to the previous month and so were milk, fruits, rice and cereals. The lower inflation comes amid a forecast of deficient monsoon this year.
“Though monsoon has been predicted to be below normal this year, the government has already outlined its preparedness and plan of action to deal with any contingency on this account,” said Jyotsna Suri, president, FICCI.
Says Siddhartha Sanyal, chief economist, Barclays Bank: “Even if monsoon turns out to be less favourable, policy actions remain on track and it should be good enough to contain food inflation going ahead.”
Overall food inflation was 3.8 per cent, much lower than the previous few months. Similarly, the May inflation in manufactured items (food products, sugar, edible oils, beverages, etc) declined by 0.64 per cent, lowest in past many months.
Inflation of manufactured products declined to (-)0.6 per cent in May from (-)0.5 per cent in April. Fuel products inflation increased to (-)10.5 per cent in May from (-)13 per cent in April.
However, Aditi Nayar, economist at ICRA said the cooling of food inflation in the WPI and CPI (Consumer Price Index) over the recent months is reassuring in light of continuing uncertainties regarding the monsoon dynamics. Further rise in year-on-year inflation for pulses in May in the WPI as well as the CPI, is a cause for concern, given the uncertainty regarding the extent and timing of monsoon rainfall in key pulses growing areas, which have an unfavourable irrigation coverage.
The Reserve Bank of India (RBI), which has an explicit inflation control mandate, has marked the monsoon as a major concern in its policy guidance. It has cut the key interest rate by 0.75 per cent in 2015, and finance minister Arun Jaitley has asked banks to reduce their lending rates.
“If the monsoon performs as it has been currently performing and we are able to keep inflation down, then there is headroom for cuts,” Arundhati Bhattacharya, chairperson SBI said earlier.
Retail inflation in May, as measured on CPI, was 5.01 per cent, marginally up from the previous month.
