WPI inflation dips to six month low of 2.2% in May 2017

Core inflation rises marginally to 2.1% in May 2017

The Wholesale Price Index (WPI)-based inflation, base year 2011-12, dipped to a six-month low of 2.2% in May 2017, showing sharp moderation for third straight months from 3.9% in April, 5.1% in March 2017 and 33-month high of 5.5% in February 2017. The WPI inflation dipped driven by fall in inflation for all three major sub-groups - primary articles, fuel and power group as well as manufactured products group in May 2017.

Inflation of primary articles turned negative at (-) 1.8% in May 2017 from 1.8% in April 2017. The inflation for fuel items dipped to 11.7% in May 2017 from 18.5% in April 2017. The inflation for manufactured products also fell to 2.6% in May 2017 from 2.7% in April 2017.

As per major commodity group-wise, inflation declined for foodgrains, fruits, vegetables, 'egg, meat & fish', spices, tea, betel leaves, fibres, oilseeds, metallic minerals, crude petroleum, mineral oils, electricity, food products, textiles, wearing apparel, leather products, and furtniture in May 2017. On the other hand, inflation of milk, floriculture, coal, chemical products, rubber & plastic products, basic metals, fabricated metal products, other non-metallic products, motor vehicle increased in May 2017.

Inflation of food items (food articles and food products) dipped to 0.1% in May 2017 from 2.9% in April 2017 level. Meanwhile, inflation of non-food items (all commodities excluding food items) also eased to 3.1% in May 2017 from 4.3% in April 2017.

Core inflation (manufactured products excluding foods products) rose marginally to 2.1% in May 2017 from 2% in April 2017.

The contribution of primary articles to the overall inflation, at 2.17%, was negative at (-) 47 basis points (bps) in May 2017 compared with 48 bps to 3.85% in April 2017. The contribution of fuel product group dipped to 113 bps against 175 bps in April 2017, while that of manufactured products was lower at 163 bps compared with 171 bps.

The contribution of food items (food articles and food products) to inflation fell to mere 04 bps in 2.17% in May 2017 compared with 85 bps to 3.85% in April 2017. Meanwhile, the contribution of non-food items (all commodities excluding food items) was 221 bps in May 2017 compared with 307 bps in April 2017.

The WPI inflation stood at 1.7% in April-May FY2018 against (-) 1% in April-May FY2017. The primary articles inflation was at 0% in April-May FY2018 from 4% in April-May FY2017, while fuel products inflation increased to 15% from (-) 14.6%. The inflation for manufactured products bounced to 2.6% in April-May FY2018 from (-) 0.7% in April-May FY2017.

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