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WPI inflation scales record low; ebbs to -2.65% in April

14 May 2015 Evaluate

In a severe disinflationary trend warranting a radical measure, the annual rate of inflation, based on monthly wholesale price index (WPI) ebbed to- 2.65% in April as compared to -2.33% witnessed in March. The number was also way lower than the street expectation of a figure of -2.07% for the month under review.

Meanwhile, February WPI was revised to -2.7% against -2.06% reported earlier. Build up inflation rate in the financial year so far was -0.06% compared to a build up rate of 0.28% in the corresponding period of the previous year. The official Wholesale Price Index for ‘All Commodities’ for the month under review declined by 0.1% to 176.0 (provisional) from 176.1 for the previous month.

The major fall came on the back of cheaper manufactured foods and food items.  Food inflation further eased to 5.73% for the month under review against three month low figure of 6.31% in March. Further the manufacturing products index, which occupies the maximum 64.97% weight in the overall index declined by 0.1% to 153.8 (provisional) from 153.9 (provisional) in March. The index for Food & Fuel group, which contributes to 14.91% weight in the overall index, declined by 1.7% to 184.2 (provisional) from 187.3 (provisional) for the previous month due to lower price of furnace oil (9%), petrol  and high speed diesel (3% each), aviation turbine fuel (2%) and electricity (1%).

However, the index for primary articles, which occupies 20.12% weight in the overall index, rose by 0.9% to 241.8 (provisional) from 239.6 (provisional) for the previous month.

Notably, this is the sixth successive month of deflating prices, with the latest number pressing the need for radical measures to address this severe disinflationary trend and fuelling renewed demands for further rate cut by the Reserve Bank of India after lower than expected IIP figures and softer than expected retail Inflation data.

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