Wholesale prices sink deeper into deflationary zone

livemint.com:

New Delhi: India’s wholesale price index plunged deeper into deflationary territory in June, even as retail prices, especially food and vegetables, surged, official data showed. The wholesale price index experienced a 4.12% decline in June, driven by lower prices of fuel, textiles, and some food products, according to data released by the commerce and industry ministry on Friday. This decline follows a 3.48% fall in May, marking the third consecutive month of wholesale deflation.

The WPI-based inflation stood at 16.23% in June 2022. Fuel and power prices saw the steepest decline, plunging 12.63% from a year earlier, compared with a 9.17% decline in May. In manufactured products, prices fell 2.71% in June, compared with a 2.97% fall recorded in the preceding month.

Food prices fell 1.24% in June compared with 1.59% in the previous month. “The decline in the rate of inflation in June is primarily due to the fall in prices of mineral oils, food products, basic metals, crude petroleum and natural gas and textiles," the official statement said. Economists said wholesale prices declined in June due to broad-based moderation in prices.

“This was the steepest contraction (annual) witnessed in about eight years, helped by continued easing of energy, chemicals and metals prices. Weak economic data from China is keeping the global commodity prices low, which in turn is supporting moderation in WPI inflation," said Rajani Sinha, chief economist at Care Edge, Care Ratings Ltd. “The sharp sequential uptick in food prices due to vegetables, milk, pulses and cereals is concerning.