Inflation based on the wholesale price index fell to a five-month low of 2.17 per cent in May, mainly because of a sharp drop in prices of vegetables. In December, the reading was 2.10 per cent. WPI inflation was 3.85 per cent in April and (-)0.9 per cent in May 2016. Pulses and cereals saw a slower growth in prices. The wholesale price index (WPI) for the month is based on the new base year 2011-12, which was revised last month from 2004-05, with an aim to reflect the macroeconomic picture more accurately. The slowdown in wholesale inflation comes against the backdrop of retail inflation easing to a multi-year low of 2.18 per cent in May. Government data showed that prices of food articles shrank by 2.27 per cent in May on an yearly basis. The inflation print for vegetables read (-)18.51 per cent.
While potato saw a deflation of 44.36 per cent, for onion, it came in at 12.86 per cent. The rate of price increase was 4.15 per cent in cereals, down from 6.67 per cent in May last year. Protein-rich pulses turned cheaper in May as prices fell by 19.73 per cent. Eggs, meat and fish saw a price decline of 1.02 per cent annually. The index basket of the new series has a total of 697 items, including 117 for primary articles, 16 for fuel and power and 564 for manufactured products. There was acceleration in prices of fuel and power (11.69 per cent) and manufactured products (2.55 per cent). However, the price rise in sugar, which falls under the category of manufactured items, slowed to 12.83 per cent in May, from 23.12 per cent a year earlier.
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