New Delhi: Wholesale price-based inflation hit a 22-month low of 2.45% in May helped by falling prices of food articles, fuel and power items, and this in turn may prompt the Reserve Bank to go for another cut in key interest rates in the current fiscal.
The Wholesale Price Index (WPI)-based inflation was at 3.07% in April this year. It was 4.78% in May 2018. Inflation in food articles basket was 6.99% In May, 2019, down from 7.37% in April, official data released Friday said.
However, onion prices spiked during the month with inflation at 15.89%. Inflation in pulses continued in double digit for four consecutive months at 18.36% in May, up from 14.32% in the previous month.
WPI inflation in May is the lowest in 22 months, since July 2017, when it was at 1.88%. India Ratings & Research Principal Economist Sunil Kumar Sinha said the core inflation at 1.2% is 29 months low in May 2019.
"This is clearly an indication of weakening of demand impulse in the economy. Dwindling auto and FMCG sales growth has been pointing towards this for past several months."
This delayed and less than normal monsoon could aggravate the food inflation further in the coming months lest the government monitors the situation proactively, checks speculative activities and intervenes in the market to stabilise prices, he added. Vegetables inflation eased to 33.15% in May, down from 40.65% in the previous month. Inflation in potato was (-) 23.36%.
