Wholesale inflation slips to 2.1 pct in May as food prices crash

India's wholesale inflation on Wednesday witnessed a sharp fall to 2.17 percent during May from 3.85 percent in April, due to plunging vegetable and onion prices that have become a rural distress across many states.

As per the latest price data released by the Commerce Ministry, the food prices, especially potato, onion and pulses, continued to fall for the third consecutive month owing to a supply glut.

Wholesale inflation rate, measured by WPI, is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.

The data shows a slump in prices of vegetables, potatoes, pulses, onions and fruits have led to a decline in the index for 'primary articles', which accounts for more than a fifth of the entire wholesale price index to (-)1.79 percent in May from 4.38 year percent ago.

However, for the month of May, retail and wholesale inflation are surprisingly identical due to similar reason-massive decline in food prices. India's retail inflation rate fell to 2.18 percent in May, lowest since 2012.

The data shows price of potato slipping nearly (-) 44.36 percent in May, as against a growth 83.98 percent last year, while that of food articles fell (-) 2.27 percent from 6.82 percent the year before.

Similarly, prices of onions fell 12.86 percent in May as compared with (-) 34.74 percent last year, while prices of pulses slumped 19.73 percent from a growth of 31.23 percent year ago.

Fuel and power inflation stood at 11.69 percent as against (-) 14.87 percent last year.

The index portrays new series of WPI data released by the government last month, with 2011-12 as the base year, replacing existing the base year of 2004-05.

The weightage of primary articles have been increased to 22.6 percent, with the new base year, compared with 20.12 percent.