India's Wholesale Inflation Contracts Further To -4.12 Per Cent In June

At -4.12 per cent, the latest WPI inflation print is the lowest since October 2015, when it had come in at -4.76 per cent

For the third month in a row in June, India's wholesale prices remained in the deflationary zone, data released on Friday by the commerce ministry revealed. The Wholesale Price Index (WPI) inflation declining further to -4.12 per cent from -3.48 per cent in May. According to the government data, at -4.12 per cent, the latest WPI inflation print is the lowest since October 2015, when it had come in at -4.76 per cent.

The decline in the rate of inflation in June is primarily due to fall in prices of mineral oils, food products, basic metals, crude petroleum & natural gas, and textiles.

On Wednesday, India’s retail inflation rose to a three-month high of 4.81 per cent in June from 4.25 per cent in May, according to a data from the Ministry of Statistics and Programme Implementation on Wednesday. The previous high CPI was in March at 5.66 per cent. The headline inflation rate snapped its four-month falling streak and was pushed up by a rise in vegetable prices and the fading away of the favourable base effect.

Uneven monsoon rains have damaged crops of some perishable foods and hindered the movement of goods, resulting in shortages of basic ingredients for Indian cooking, such as tomatoes, chillies, and onions. The pressure on food prices is likely to persist over the coming months, making it less likely that inflation would return to the central bank's 4 per cent target in the near term.

However, the all-commodities index of the WPI fell by 0.4 per cent month-on-month (MoM) in June, indicating weakening of price momentum. The sequential fall in prices was led by fuel and manufactured products, whose indices contracted by 1.8 per cent and 0.5 per cent, respectively.

Meanwhile, food prices were on the up, as was the case in the CPI data, with the food index 1.4 per cent higher in June compared to May.