WPI inflation eases to 4-month low of 5.43% in June

After rising to a five-month high in May, inflation dipped to 5.43 per cent in June mainly on account of decline in prices of food items and vegetables with the exception of potato and onion.

It was at 5.16 per cent a year ago in June 2013.

As per the Wholesale Price Index inflation, prices of vegetables as a category declined by 5.89 per cent during the month, while that of potato and onion soared by 42.51 per cent and 10.70 per cent respectively in the wholesale market.

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Inflation had soared to a five-month high of 6.01 per cent in May 2014.

Among other important items, prices of sugar and edible oils fell by 2.09 per cent and 0.75 per cent respectively during June.

The food items that became expensive during the month include fruits (up 21.40 per cent), followed by milk (10.82 per cent), egg, meat and fish (10.27 per cent) and rice (10.24 per cent).

The inflation of food items as a category, however, continued to remain high at 8.14 per cent during the month and will continue to be a cause of concern for the government which is gearing up to meet the impact of poor monsoon on the price situation.

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The government has been taking steps to control prices of staple kitchen items like onions and potatoes.

Last month, the Centre imposed minimum export price on onions ($300 a tonne) and potatoes ($450 a tonne) and raised it further in the case of bulb to $500 a tonne this month to improve domestic supplies.

At the same time, the stock holding limit was imposed on these food items even as the government decided to release 5 million tonnes of rice in the open market to prevent price rise due to poor monsoon.

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The government expects food prices to ease following these measures.

During the month, prices of cereals declined steeply to 5.33 per cent while that of pulses got expensive at 1.78 per cent year-on-year.

In the non-food articles category, the rate of price rise during the month was slower at 3.49 per cent.

Among others, prices of fuel and power accelerated at a slower pace of 9.04 per cent, while that of beverages, tobacco & tobacco products rose to 8.64 per cent.

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Following the presentation of Budget 2014-15 by Finance Minister Arun Jaitley last week, prices of beverages and tobacco products have become costlier due to levy of higher duty, which is likely to push up inflation in these items going forward, experts feel.

Among other items in the manufactured category, cotton textiles price rose to 8.31 per cent, though prices of man-made textiles accelerated at a slower pace of 5.54 per cent.

The rate of price rise of cement and lime stood at -4.45 per cent and for basic metals alloys and metal product at 2.83 per cent.

The WPI inflation for April was, however, revised upwards at 5.55 per cent from 5.20 per cent.

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