The annual rate of wholesale price inflation (WPI) decelerated further to its lowest in six months at (-)2.65 per cent for April from (-)2.33 percent for the month before. The annual rate of inflation based on WPI was 5.5 per cent in April 2014. According to official data, India's retail inflation based on the consumer prices index (CPI) was also on a downswing in April, declining by 40 basis points to 4.87 per cent.
The WPI data released by the commerce and industry ministry said the decline was thanks mainly to a fall of 28.65 per cent in the prices of minerals and 13.03 per cent in that for fuels. Under food articles, the price of potatoes was as much as 41.14 per cent lower in April this year over the like month of the previous year. Similarly, the decline was 1.32 per cent for vegetables and a marginal 0.04 per cent in rice.
But onions were dearer by 29.97 per cent, pulses by 15.38 per cent, fruits by 14.22 per cent and milk by 7.42 per cent. As a result, the index for food articles gained 5.73 per cent. The easing of global crude oil prices also had a significant impact on prices of petroleum fuels, diesel contracting by 14.39 per cent, petrol by 18.44 per cent and cooking gas by 6.06 per cent.
The index for manufactured products was also down 0.52 per cent April over April. The current data also kept India Inc's hope of a rate cut in the next monetary policy review of the RBI scheduled for June 2, 2015 alive.
As per the industry body Confederation of Indian Industry (CII), the decline in WPI, which comes close on the heels of a drop in retail prices, is driven by a drop in food prices even while the prices of fuel and manufactured goods continue to be in the red. "The benign inflation outlook, fuelled by soft commodity prices and the anti-inflationary policies of the government, should provide sufficient elbow room to the RBI to continue with growth inducing policy in its forthcoming monetary policy announcement," said Chandrajit Banerjee, director general, CII.
Another leading industry body Federation of Indian Chambers of Commerce and Industry (Ficci), the moderation in price rise has been broad based and seen in major food articles, fuel as well as manufactured products. "Slight upside risk does persist on account of unseasonal rains and possibility of below normal monsoons. We are sure that the state and central government agencies will make all efforts in balancing demand and supply and addressing structural bottlenecks to control rise in food prices due to any such exigencies," said Jyotsna Suri, president, Ficci.