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Investing.com -- India’s wholesale price index (WPI) inflation fell to a 14-month low of 0.4% year-on-year in May, down from 0.9% in April, according to new data.
The decline was lower than the Bloomberg consensus estimate of 0.6% and marked the seventh consecutive month of sequential WPI decreases. The drop was driven by weakness across all components of the index.
Deflation in primary articles deepened significantly due to the absence of seasonal increases in wholesale vegetable prices and continued declines in wholesale non-perishable goods prices. Wholesale vegetable prices dropped to 21.6% year-on-year, reaching a 28-month low.
Non-perishable goods continued their downward trend with wholesale pulses prices falling 10.4% year-on-year and cereals showing weakness at 2.6% year-on-year. These decreases were partially offset by a 10.2% year-on-year rise in wholesale fruit prices.
The non-food manufactured WPI inflation, also known as core WPI, declined further to 0.8% year-on-year, remaining substantially below the core Consumer Price Index (CPI) which stands at 4.2% year-on-year.
Manufactured goods prices weakened further while energy prices fell, contributing to the overall decline in the wholesale price index.
Despite recent volatility in oil prices due to escalating geopolitical tensions, input costs in India are expected to remain manageable in the near term. This is due to material price buffers on the retail side, which will likely limit contributions to both WPI and CPI inflation for an extended period.
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