WPI deflation to rise 3% in May: SBI report

WPI inflation is expected to decline further to about (-)3 per cent in May despite concerns over weak monsoon and strengthening crude prices, says an SBI research report. Deflationary trend continued for the sixth month in a row with inflation dropping to a new low of (-)2.65 per cent in April, mainly on account of decline in prices of fuel and manufactured items even as food prices increased.

According to <g data-gr-id="18">a SBI</g> research note, concerns of unseasonal rains, weak monsoon, strengthening crude prices, rupee depreciation and MSP increases impacting inflation trajectory may be unfounded and unsubstantiated. “While weak monsoon may not impact food inflation in a year of bulging stocks, crude prices increase as well as rupee depreciation may not materially impact wholesale prices as also retail prices,” SBI said in a research note. According to the report, WPI and CPI next month (May) will trend even lower (WPI close to negative 3 per cent, while CPI at close to 4.5 <g data-gr-id="14">per cent</g> or so).