Wholesale Inflation May 2024: Eases to 0.39% | Food Inflation 1.72%
India’s wholesale inflation eased to 0.39% in May, a positive shift after the previous month’s 0.85%. However, the decrease masks underlying inflationary pressures. While wholesale inflation shows initial signs of cooling, food inflation remains a concern, dipping to 1.72% but still impacting consumers. Manufactured product inflation increased, and the role of rising costs in specific sectors continues. The Reserve Bank of India (RBI) reduced the repo rate.News Directory 3 provides this in-depth analysis of the wholesale price index (WPI) changes, offering crucial insights for businesses and policymakers. Discover what’s next for wholesale prices and the factors that drive future trends.
Wholesale Inflation Eases in May,Food Prices Still a Concern
India’s wholesale price index (WPI),a key measure of wholesale inflation,saw a decrease to 0.39% in may, according to official data released Monday. This is down from 0.85% the previous month. The wholesale inflation role is still being affected by rising costs in specific sectors.
Despite the overall easing, increases in the prices of manufactured food products, electricity, chemical products, and transport equipment kept wholesale prices in inflationary mode. The WPI,often referred to as headline inflation,tracks the rate at which wholesale prices for various goods and services increase across the country.
Food inflation, as measured by the WPI Food Index, also experienced a decrease, falling to 1.72% in May from 2.55% in April. The food index, which includes food articles and food products from both primary articles and manufactured products categories, holds a notable weight of 24.38% within the overall WPI.
However, inflation in manufactured products, which account for 64.23% of the WPI, increased to 2.62% last month, up from 2.04% in April.
Conversely, the primary articles and fuel and power categories remained in deflationary territory.Deflation in the primary articles group (22.62% weight) worsened to 1.44% from 2.02% the previous month. The fuel and power group (13.15% weight) saw deflation of 2.18% in May, compared to 2.27% in April.
The Reserve Bank of India’s Monetary Policy Committee (MPC), led by the RBI Governor, primarily monitors consumer inflation data when formulating monetary policy. The MPC recently reduced the repo rate by 50 basis points and shifted its policy stance from ‘accommodative’ to ’neutral’.
What’s next
Economists will be closely watching upcoming inflation data to assess the effectiveness of recent policy changes and to understand the trajectory of wholesale and consumer prices in the coming months. The role of global commodity prices and supply chain dynamics will also be crucial factors.