Although the prices of various kitchen items eased, pulses and onion turned dearer in June, as per the Wholesale Price Index (WPI) data released by the government on Tuesday. The inflation was (-)2.36 per cent in May, while it stood at 5.66 per cent in June 2014. The wholesale inflation has been in the negative zone since November 2014.
This comes a day after the Consumer Price Index (CPI) data showed that retail inflation edged up to eight-month high of 5.4 per cent in June. RBI, which has cut its rates thrice so far this year, mostly tracks the retail inflation for its monetary policy review, but the industry body on Tuesday said there is a case for rate cut with the wholesale prices showing a continuing deflationary trend.
The recent data showing weakness in manufacturing and services sectors have also added to the clamour for a rate cut by RBI to propel investments and boost the economy. According to the WPI data, rate of price rise eased for food items, especially wheat, fruits and milk in the wholesale market. Overall wholesale inflation in food category declined to 2.88 per cent compared with 3.80 per cent in May.
Vegetable prices declined 7.07 per cent, with of potato slumping 52.40 per cent. Sugar prices too are on decline. Pulses were dearer by 33.67 per cent in June. Fuel and power inflation was stood at (-)10.3 per cent. Commenting on the data, industry body CII said the near static price line and benign inflation outlook should propel the RBI to continue with its rate easing cycle in its next monetary policy to support investment and consumption demand.
However, it may not be easy for the RBI to take such a call based on WPI data as it primarily factors the consumer price inflation, which inched up in June. RBI is scheduled to come out with its next bi-monthly monetary policy review on August 4. Earlier, the RBI had said it would watch out for the data, including inflation, and the monsoon progress before any change in its policy rates.
The WPI data further said the manufactured products index inflation was (-)0.77 per cent as against (-)0.64 per cent last month. Prices eased for cement, non-metallic mineral products and transport equipment and parts.
Meanwhile, Union Finance Minister Arun Jaitley on Tuesday said the Centre was planning to spend Rs 50,000 crore on the farming and irrigation sector and plans were also afoot to roll out an insurance scheme exclusively for the farming sector to compensate for crop loss. Admitting that the condition of farmers is a “matter of concern”, Jaitley said, “In the coming time, we have plans to spend Rs 50,000 crore on farming and irrigation sectors in the country.”
Govt’s wheat procurement surpasses last year’s level
The government’s wheat procurement in the 2015-16 marketing season has surpassed last year’s level of 28 million tonnes(mt). The FCI had set the wheat procurement target of 30 mt for this season. Wheat procurement begins from April. “Wheat procurement by government agencies during current marketing season has crossed the last year mark. As on July 13, a total of 28.08 mt have been procured in various growing states,” the Food Ministry said in release. Punjab, Madhya Pradesh and Haryana have contributed maximum to the government’s central pool, it said.