Business
As per the government data released on Wednesday, the WPI inflation was at 2.02% in June this year and 5.27% in July 2018
Updated : Aug 15, 2019, 06:05 AM IST
Wholesale price index (WPI)-based inflation declined for the third consecutive month to a 25-month low of 1.08% in July, on the back of subdued prices of food items, fuel and manufactured products.
As per the government data released on Wednesday, the WPI inflation was at 2.02% in June this year and 5.27% in July 2018.
The consumer price index (CPI)-based inflation, which the Reserve Bank of India (RBI) takes into account while deciding its monetary policy, eased marginally to 3.15% in July. This indicated room for further rate cut in monetary policy in October.
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Although the RBI does not take into account the WPI while deciding its monetary policy, steep decline in wholesale inflation rate to 1.08% will strengthen the case for a further rate cut in the next policy decision in October
The inflation in food articles stood at 6.15% in July, as against 6.98% in the previous month, as per the data released by the Commerce Ministry.
Similarly, the wholesale inflation in fuel and power segment contracted further to (-) 3.64% as against (-) 2.2% in June. As far as non-food articles are concerned, the wholesale rate of price rise stood at 4.29%, lower than the previous 5.06% in June.
Inflation in manufactured products eased marginally to 0.34% from 0.94%.
"WPI inflation is expected to remain muted in the near term, reflecting the continued softness in commodity prices, although a weaker currency may arrest the correction in the price of imports," said Aditi Nayar, principal economist of Icra. Around half of the core-CPI is made up of services, the demand for which is likely to be sticky in a downturn and prices relatively inelastic to changes in commodity prices, she said.