India's WPI Inflation In May Eases To -3.48 Per Cent, Lowest Since November 2015

The last time wholesale inflation was lower was in November 2015, when it had come in at -3.68 per cent

India's wholesale price index (WPI)-based inflation fell to its lowest level since November 2015 to -3.48 per cent in May with a favourable base effect again playing a starring role, according to a release by the Ministry of Commerce on Wednesday revealed. In April, the wholesale inflation was -0.92 per cent. At -3.48 per cent, the latest WPI inflation print is the lowest in seven-and-a-half years. The last time wholesale inflation was lower was in November 2015, when it had come in at -3.68 per cent.

According to the data, the food wholesale inflation has fallen to -1.59 per cent in May as compared to 0.17 per cent in April. 

The wholesale inflation data comes a couple of days after the statistics ministry said on June 12 that headline retail inflation fell to a 25-month low of 4.25 percent in May. No only did wholesale prices fall on a year-on-year (YoY) basis in May, resulting in the sub-zero inflation print, but they were also lower compared to April, with the all-commodity index of the WPI down by 0.9 per cent. This is the greatest sequential fall in the index in five months.

Vegetables saw a decline in inflation at (-) 20.12 per cent, while the same in potato and onion was (-) 18.71 per cent and (-) 7.25 per cent respectively. However, inflation in pulses saw a sharp uptick at 5.76 per cent, and in wheat it was 6.15 per cent.

Fuel and power basket inflation eased to (-) 9.17 per cent in May, from 0.93 per cent in April.

"Decline in the rate of inflation in May, 2023 is primarily contributed by fall in prices of mineral oils, basic metals, food products, textiles, non-food articles, crude petroleum & natural gas, and chemical & chemical products," the commerce and industry ministry said on Wednesday.

"Indeed, India has doubled its imports of low-cost Russian oil over the past year. This has helped keep the cost of energy manageable and helped to tame its high inflation," Moody's Analytics, Chief APAC Economist, Steve Cochrane said.

In manufactured products, the inflation rate was (-) 2.97 per cent in the month under review, as against (-) 2.42 per cent in April.

Barclays, MD & Head of EM Asia (ex-China) Economics, Rahul Bajoria said wholesale prices fell further last month, as pressures eased across food, fuel and core. "We expect retail inflation to be on a moderating trajectory in the near term, which suggests the MPC is likely to be on hold for the rest of the fiscal 2023-24," Bajoria said, adding that "RBI will want to see headline (and ideally core) CPI inflation moving towards the 4 per cent target on a durable basis, before considering rate cuts."