WPI remains in negative zone for eighth month at -2.4%

Inflation in onions remained elevated despite coming down to nearly 18.54% in June from 20.41% in May

Annual wholesale prices continued to decline for the eighth consecutive month in June, backed primarily by lower commodity prices, which might, however, not induce the Reserve Bank of India (RBI) to ease monetary stance next month as the main barometer - consumer prices - rose to a nine-month high in June.

Official data released on Tuesday showed the Wholesale Price Index (WPI) declined at a faster rate of 2.40 per cent in June year-on-year compared with 2.36 per cent in May. There was WPI inflation at 5.66 per cent in June, 2014.

In fact, WPI food inflation also came down to 2.88 per cent in June from 3.80 per cent in the previous month.

The data came a day after another official numbers showed that the Consumer Price Index (CPI)-based inflation rose to a nine-month high of 5.40 per cent in June, on the back of spike in food prices.

Besides differences in calculating WPI and CPI, economists said higher margins at retail level also led to the divergence between the two inflation numbers, particularly on food front.

"There is higher margin at retail level than at wholesale level which has has led to higher inflation in CPI," Madan Sabnavis, CARE Ratings chief economist, said.

However, inflation in essential food items like pulses pointed to concerns of possible higher food inflation.

According to the data, prices of pulses grew 33.67 per cent in June year-on-year, compared with 22.84 per cent in May, and 15.38 per cent in April.

Inflation in onions remained elevated despite coming down to nearly 18.54 per cent in June from 20.41 per cent in May and 29.97 per cent in April.

WPI in oil and related items declined 10.03 per cent in June, a little less than 10.51 per cent in May.

Manufactured products, which have an almost 65 per cent weightage in the index, saw a deflation of 0.77 per cent in June, compared with 3.95 per cent for the corresponding period last year, and -0.64 per cent in May. The year-over-year decline was on account of sugar, textiles, chemicals and iron.