Wholesale price dropped to a new low

Deflationary pressure continued for the sixth month in a row with inflation dropping to a new low of (-)2.65%  in April, mainly on account of decline in prices of fuel and manufactured items even as food prices increased.

Inflation, as measured on the Wholesale Price Index (WPI), has been in the negative zone since November, 2014. In April last year, it was 5.55%.

The deflationary trend has bolstered the case for a rate cut by the Reserve Bank, as retail inflation has also eased and industrial production is down, experts said. Industrial output had slowed to 5-month low of 2.1% in March.

Inflation was (-)2.33% in March, (-)2.17% in February, (-)0.95% in January, (-)0.50% in December and (-) 0.17% in November.

In April this year, the manufactured products segment witnessed deflation for the second consecutive month as prices dropped to a record low of (-)0.52%.

Inflation in food articles category stood at 5.73%, from 6.31%in March. For fuel and power, it was (-)13.03% in April.

Potato prices saw the steepest fall at (-)41.14% in April. For vegetables, the decline was (-)1.32%.

However, inflation in pulses was at 15.38%, and for egg, meat and fish at 4.01% during the month.

The February WPI inflation data has been revised downwards to (-)2.17% as against the provisional estimate of (-)2.06%

The Consumer Price Index based inflation data, released earlier this week, showed retail inflation fell to a 4-month low of 4.87% in April on account of easing food prices.

ICRA Senior Economist Aditi Nayar said: "The data reinforces our expectation of a high probability of 0.25% rate cut in June 2 RBI policy."