New Delhi: Wholesale price inflation (WPI) declined to a 14-month low of 0.39 per cent in May on easing prices of food articles and fuel, and experts said geopolitical tensions could push up prices. WPI-based inflation was 0.85 per cent in April. It was 2.74 per cent in May last year.
In a statement, the industry ministry said the inflaton in May is in positive zone primarily due to “increase in prices of manufacture of food products, electricity, other manufacturing, chemicals and chemical products, manufacture of other transport equipment and non-food articles”.
According to the WPI data, food articles saw a deflation of 1.56 per cent in May, against a deflation of 0.86 per cent in April, with vegetables, onion, potato and pulses seeing negative inflation. Deflation in vegetables was 21.62 per cent in May, compared to 18.26 per cent in April.
Fuel and power, too, saw a deflation of 2.27 pc in May, compared to a 2.18 per cent inflation in April. Manufactured products, however, saw positive inflation at 2.04 per cent, compared to 2.62 per cent in April.
Data released last week showed retail inflation eased to over six-year low of 2.82 per cent in May mainly due to subdued food prices. The RBI this month cut benchmark policy interest rates by a sharp 0.50 per cent to 5.50 per cent amid easing inflation. The RBI has cut inflation projections for the current fiscal year to 3.7 per cent from the earlier estimate of 4 per cent, as it expects core inflation to remain benign with the easing of international commodity prices. The sub-4 per cent average retail inflation projection is the lowest in recent years.
ICRA said crude oil prices have risen quite sharply in the ongoing month, following escalation of tensions between Israel and Iran. The price of the Indian basket of crude oil has averaged 4.3 per cent higher on a month-on-month basis during June 1-13 after contracting continuously since February.