WPI inflation plunges to 91-month low

WHOLESALE PRICE INDEX (WPI), which fell into the deflation zone in April, slipped further into the negative territory in May, helped by a high base and fall in prices of food articles, according to official data released on Wednesday.

- MUKESH JAGOTA

This has added to the comfort of monetary policy managers, coming as it did after data showed in Monday a sharp fall in retail inflation during the month.

At-3.48%, wholesale price inflation in May was the lowest since October 2015, when it was -3.81%; the figure was -0.92% in April and 16.63% in May 2022.

Retail inflation, as measured by consumer price index, declined to a 25-month low of 4.25% on year in May from 4.7% in April, as prices of most foods items and fuel eased, and a one-off base effect helped.

The fall in wholesale prices comes as a relief to producers as their input costs go down. It has a pass-through impact on retail prices, too, but with a lag. The movement of CPI is influenced by the WPI not in uniform manner, given the compositional incongruity between the two indices.

The CPI is closely monitored by the Monetary Policy Committee under a medium-term flexible inflation targeting framework, with tolerance band of 4+/-2%.