Thanks to easing prices of food, fuel and manufactured items, the wholesale price-based inflation rate has declined by (-) 3.48 per cent in May, a 3-year low. The wholesale price index (WPI) based inflation rate has been in the negative territory for the second straight month. In April it was (-) 0.92 per cent. In May, 2022 WPI inflation was at 16.63 per cent.
The May, 2023 data print of (-) 3.48 per cent is the lowest WPI print recorded since May 2020, when wholesale inflation was at (-) 3.37 per cent. Inflation in food articles eased to 1.51 per cent in May, against 3.54 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.
Fuel and power basket inflation eased to (-) 9.17 per cent in May, from 0.93 per cent in April. In manufactured products, the inflation rate was (-) 2.97 per cent in the month under review, as against (-) 2.42 per cent in April. The deceleration in WPI comes in line with the easing of May retail inflation, which came in at a 25-month low of 4.25 per cent. The fall in WPI came two days after retail inflation declined to a 25-month low of 4.25 per cent in May, mainly on account of softening prices of food and fuel items. Inflation based on the Consumer Price Index (CPI) stood at 4.7 per cent in April and 7.04 per cent in May 2022.
It was the fourth straight month when retail inflation declined and the third month in a row that Consumer Price Index (CPI) based inflation remained within the RBI's comfort zone of below 6 per cent. At 4.25 per cent, retail inflation is the lowest since April 2021 when it was 4.23 per cent.
The government has tasked the central bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side.