India’s wholesale price-based inflation fell by 3.48 per cent in May on an annual basis as against a contraction of 0.92 per cent in April, the Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry stated on Wednesday.
“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,” a government press release stated.
Inflation rate for food index witnessed a contraction of 1.59 per cent in May. For primary articles, inflation contracted by 1.79 per cent in May.
Fuel & power inflation reduced by 9.17 per cent in May. Meanwhile, inflation in manufactured products, which accounts for a major chunk of the WPI, declined 2.97 per cent against a contraction of 2.42 per cent in April.
India's retail (CPI) inflation had also moderated further in May to hit a two-year low of 4.25 per cent against 4.7 per cent the previous month. The number remained within the Reserve Bank of India’s (RBI)tolerance limit of 2-6 per cent owing to moderation in food and fuel prices.
In its recent Monetary Policy Meet (MPC) which concluded on June 8, the RBI had revised down the inflation forecast for FY24. The decision came amid recent dips in inflation readings, but the print is seen to remain above the 4 per cent target for this fiscal year while there are upside risks to food and commodity prices from potential supply cuts.
India's retail inflation was above RBI's 6 per cent target for three consecutive quarters and had managed to fall back to the RBI's comfort zone only in November 2022. Under the flexible inflation targeting framework, the RBI is deemed to have failed in managing price rises if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row.
Source Name:Economic Times