The Wholesale Price Index (WPI)-based inflation was at 2.45 per cent in May. It was 5.68 per cent in June 2018.
Wholesale inflation cooled to a 23-month low of 2.02% in June from 2.45% in May as prices rose at a slower pace for vegetables and manufactured products, and dropped for fuel and power, leading economists to reiterate their expectations of a rate cut next month. Inflation in vegetables softened to 24.76% in the past month from 33.15% in May and in manufactured items to 0.94% from 1.28%, data from the commerce and industry ministry showed on Monday. Fuel and power wholesale prices shrank 2.2% in June from a year ago from an expansion of 0.98% the previous month.
The government revised the wholesale inflation for April to 3.24% from the provisional rate of 3.07% announced earlier. “The dip in the WPI inflation to a 23-month low in June was led by a favourable base effect, lower crude oil prices, as well as the decline in core inflation to below 1%, highlighting the lack of pricing power, and offsetting the concern generated by firm food inflation,” said AditiNayar, principal economist at ratings firm Icra. The core wholesale inflation— which covers non-food manufacturing — eased to a 31-month low at 0.8% in June, extending its fall to a third straight month, pointing to the weak pricing power of producers. As per Indranil Pan, group economist at IDFC Bank, lower inflation in chemicals and basic metals would provide an input cost benefit to manufacturers and keep retail inflation in check. The wholesale price of basic metals fell 3.72% in June from a year earlier.