The fall in WPI inflation has been attributed to declining prices of manufactured items, even as prices of food articles inched up
The wholesale price index (WPI) based inflation fell to 4.7% in May, driven mainly by declining prices of manufactured items, even as prices of food articles inched up. Inflation based on the WPI stood at 4.89% in April. In May, 2012, it was 7.55%.
As per official data released on Friday, WPI inflation in the manufactured items category declined to 3.11% in May from 3.41% in April. The non-food articles category, which includes fibre, oil seeds and minerals, saw sharp decline in inflation to 4.88%, from 7.59% in April.
However, inflation in food articles category, which has a 14.34% share in the WPI basket, rose to 8.25% in May. Inflation in this category was at 6.08% in April. The rise in food inflation was on account of increase in prices of onions, vegetables, cereals and protein-based items.
Inflation in vegetables stood at 4.85% in May, against (-) 9.05% in the previous month. The rate of price rise in onion was high at 97.40% for the month, as against inflation rate of 91.69% in April.
Inflation for March was revised downwards to 5.65% from 5.96% as per provisional estimates. The inflation data would be closely watched by the Reserve Bank of India (RBI) while formulating its mid-quarter policy which is scheduled on Monday.
There have been demands for a lower interest rate in the backdrop of declining inflation. Finance ministry sources, commenting on inflation numbers, said they would want lower interest rates and monetary policy transmission.
While the RBI has lowered interest rates by 1.30% since January 2012, the banks have cut lending rates by only 0.30%.
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