New Delhi: India’s Wholesale Price Index-based (WPI) inflation fell to a four-month low of 5.4 per cent in June from six per cent in May. While the fall in inflation came from lower food and fuel inflation, the manufacturing inflation in fact edged up slightly.
A decline in inflation in foodgrain, fruit and vegetables, egg, meat and fish drove food inflation down to 8.1 per cent in June from 9.5 per cent in May. Fuel inflation also fell by 1.5 percentage points to nine per cent, as petrol prices fell from the 28-month high seen last month. A part of the fall seen in both food and fuel inflation was also due to the strong base effect from the same month last year.
The non-food manufacturing inflation – the Reserve Bank of India (RBI)’s measure of core inflation – edged up to 3.9 per cent in June from 3.8 per cent in May. Core inflation captures demand-side pressures on prices and is expected to rise as the economy grows. Industrial production for May (4.6 per cent year-on-year growth) signals that the economy is witnessing green shoots of recovery. As the growth recovers, price pressures across several manufacturing categories such as beverages, textiles, chemicals and machinery and machine tools will rise further.