WPI Inflation sinks to 23 month low in June

The WPI Inflation continued its declining trend as it dropped to 2.02 per cent YoY in June 2019 from 2.45 per cent YoY in May 2019, thereby plummeting to a 23-month low.

The tumble is attributable to the tremendous fall in fuel prices and the prices of power items. Furthermore, moderation in manufactured products was a dampener.

On a positive note, the WPI in manufactured products showcased a growth of 0.94 per cent YoY in June 2019. However, this is the lowest reported growth since August 2016. Softening of metal prices arrested the growth of prices of manufactured products. The inflation in manufactured items is often used to gauge consumer demand. Its consistent decline since October 2018 is cause for concern as it signals a loss of pricing power of the industry.

On the other hand, despite a marginal drop in food prices, they still remained at heightened levels due to interruptions in supply on account of the monsoon and a hike in wholesale prices. WPI food inflation stood at 5.04 per cent YoY. This is primarily on account of rising vegetable prices. However, non-food products such as textiles, paper and chemicals witnessed moderation in prices.

Wholesale Price Index-based inflation is the price of a representative basket of wholesale goods. It reflects the average change in prices of goods that are bought and sold in the wholesale market.