WPI falls for straight third month in June, but food inflation rises

WPI falls for straight third month in June, but food inflation rises

Wholesale price index (WPI) declined for the third month in a row at 1.81 per cent in June, but the rate of contraction fell from a 4.5-year high of 3.21 per cent in the previous month. The contraction happened despite some increase in inflation rate in food items, particularly in tomatoes, potatoes and the processed products.

The government had not released the figures for April, citing inability to capture prices in some segments amid a nationwide lockdown to contain the coronavirus. However, in the light of improved response rates from the selected sources, the government on Tuesday came out with data for April too which showed that the deflation rate stood at 1.57 points in the month.

Food inflation in WPI rose to 2.04 per cent in June from 1.13 per cent due to disruptions caused by rains, striking a discordant note with its consumer price index (CPI) counterpart. Manufactured food items showed elevated inflation rate at 5.05 per cent compared to 4.46 per cent.

Even though the price pressure in retail food prices were much more, the inflation rate declined in June at 7.87 per cent in June from 9.20 per cent in the previous month.

Together, both kinds of food items account for little over 24 per cent of WPI. Tomatoes, potatoes and paddy pushed up the food inflation in primary items (unprocessed food), while animal and vegetable oil and fats drove inflation in manufactured food items.

The remaining part of items, comprising around 75 per cent of the index, continued to show deflation.

For instance, the fuel and power category witnessed deflation at 13.60 per cent in June, even though less than 19.83 per cent in the previous month. Most items in the category such as petrol, diesel, liquefied petroleum gas (LPG) showed a fall in prices even though the rate is less than May’s.

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