A decline in food prices dragged India's annual rate of inflation based on wholesale prices to its lowest level in the last five months and prompted India Inc. to call for a monetary policy easing.According to data from the Ministry of Commerce and Industry, the wholesale price index (WPI), with the revised base year of 2011-12, decelerated further in May 2017 to 2.17 per cent from 3.85 per cent in April as food prices eased.The wholesale prices had decelerated in April to 3.85 per cent from 5.11 per cent reported for March. However, the WPI in May 2016 declined to (-) 0.90 per cent.The base year of the current WPI, which was revised last month from 2004-05 to 2011-12, does not include indirect taxes, thus, decreasing volatility in inflation at wholesale level.The updated item basket of WPI has 697 items in the new series from the earlier 676.On a year-on-year (YoY) basis, expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, declined by (-) 1.79 per cent as compared to a rise of 4.38 per cent during the same month a year ago.The prices of food articles slipped by (-)2.27 per cent during the month under review.
The wholesale inflation rate for onion was lower year-on-year by (-)12.86 per cent, while that for potatoes plunged by (-) 44.36 per cent.Overall, vegetable prices in May declined by (-) 18.51 per cent, against a rise of 13.93 per cent in the same month a year ago.Year-on-year, while wheat became expensive by 2.23 per cent, protein-based food items such as eggs, meat and fish became dearer by (-)1.02 per cent.Prices of manufactured products, which comprise nearly 64.23 per cent of the index, rose by 2.55 per cent. The sub-category of manufactured food products registered a rise of 4.78 per cent.The fuel and power price sub-index inflation accelerated by 11.69 per cent. Segment-wise, the price of high-speed diesel rose by 22.71 per cent last month, while that for petrol climbed by 18.51 per cent, and for LPG by 18.17 per cent.Official data on Monday showed that retail, or consumer price indexed (CPI), inflation in India during May fell to 2.18 per cent, against 5.76 per cent in the same month of last year, pulled down by sharp fall in food prices.The consumer food price index (CFPI) moved into deflation as prices in May fell by (-)1.05 per cent, as compared to a rise of 7.45 per cent in the corresponding month of 2016, pulled down by lower prices of pulses, cereals and perishable goods.
The current inflation rate is the lowest since the series began in 2012.Meanwhile, India Inc. called for an easing of the monetary policy by the Reserve Bank of India (RBI in line with last month's deceleration in the country's annual rate of inflation based on wholesale prices."I think the case for supporting growth is getting stronger and we hope that RBI will take a relook into its monetary policy stance in the light of these new numbers," said Ficci President Pankaj Patel."We need to boost investments and growth, which is so essential for employment generation across the economy."Another major industry organisation, Assocham pointed out that the fall in WPI will have a consequent downward impact on CPI, which may allow the RBI to induce the demand in the country by reducing the interest rates. The industry chamber indicated that WPI data for the coming months is expected to fall as well.