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Covid-19 impact: It is WPI deflation for the first time in 4.5 years

Development raises hope of another 25 bps cut in repo by MPC

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Aditi Nayar, principal economist at ICRA, said the extent of deflation in the WPI in May, 2020 was deeper than she had pencilled in.

Indivjal Dhasmana New Delhi

4 min read Last Updated : Jun 16 2020 | 1:16 AM IST

Wholesale prices, whose increase or decline is measured in terms of the wholesale price index (WPI), entered the deflationary zone for the first time in over four and a half years as the marker fell 3.2 per cent in May due to slackening demand in the economy, hit hard by the pandemic.

As this will translate into low retail inflation at some time, economists expect the Reserve Bank of India (RBI) to go for another rate cut of 25 basis points. Before this, there was a decline in the WPI — at 3.68 per cent — in November 2015. During

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