Lower prices of manufactured items and key transportation fuels eased India's annual rate of inflation based on wholesale prices to 2.45 per cent in May from 3.07 per cent in April, official data showed on Friday.
Even on a year-on-year (YoY) basis, May's WPI inflation rate was lower than 4.78 per cent reported for the corresponding period of previous year, showed the data furnished by the Ministry of Commerce and Industry.
"The annual rate of inflation, based on monthly WPI, stood at 2.45 per cent (provisional) for the month of May 2019 (over May 2018) as compared to 3.07 per cent (provisional) for the previous month and 4.78 per cent during the corresponding month of the previous year," the Ministry said in its review of "Index Numbers of Wholesale Price in India" for May.
"Build up inflation rate in the financial year so far was 1.08 per cent compared to a build up rate of 1.72 per cent in the corresponding period of the previous year."
On a year-on-year (YoY) basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, rose to 6.16 per cent from 3.79 per cent.
Similarly, the prices of food items increased at a faster rate. The category has a weightage of 15.26 per cent in the WPI index. It increased to 6.99 per cent from 1.74 per cent.
The cost of fuel and power, which commands 13.15 per cent weightage, increased to 0.98 per cent against a rise of 12.65 per cent on a YoY basis.
Product-wise, the price of high-speed diesel inched-up 0.94 per cent from 17.34 per cent on a YoY basis, petrol deflated (-) 1.02 per cent from 13.9 per cent.
Besides, expenses on manufactured products registered a rise of 1.28 per cent against 3.82 per cent.
"The key driver of lower wholesale inflation has been manufactured products... Even fuel group inflation dropped to 1 per cent in May 2019 compared with 3.8 per cent in April 2019 due to softening of global crude prices," said Sunil Kumar Sinha, Director - Public Finance and Principal Economist, India Ratings & Research (Fitch Group).
"This is clearly an indication of the weakening of demand impulse in the economy. Dwindling auto and FMCG (fast moving consumer goods) sales growth has been pointing towards this for past several months."
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