Wholesale price inflation in India maintained its declining trend and dropped to its lowest point since May 2015 because of lowering food, fuel, and commodity costs.
Inflation, as measured by the Wholesale Price Index (WPI), decreased by 3. 5% in May, a steeper decrease than the 0. 9% decrease seen in April, according to data issued by the ministry of trade and industry.
Data released earlier this week showed retail inflation eased to a 25-month low in May on the back of a favourable base effect and moderating food prices.
“Food prices rose 1. 5% YoY in May, down from 3. 5% in April. Sequentially, WPI primary food prices declined 0. 2% MoM in May (+1. 5% in April), driven by prices falling in cereals, vegetables, and fruits,” Barclays said in a note.
According to economists, the RBI will hold interest rates as it evaluates the effects of the recent rate increases. The effects of the El Nino weather phenomena on the agricultural industry and monsoon rains also need to be kept an eye on.