Wholesale inflation has fallen to third consecutive month to 1.08 per cent in July as against 2.02 per cent in June, says the government data. Wholesale price-based inflation has seen a multi-month decline, thanks to a dip in prices of fuel and food items, according to official data released Monday.
The government data said wholesale inflation in food articles was 6.15 per cent in July as against 6.98 per cent in the previous month. Similarly, wholesale inflation in fuel and power segment contracted further to (-) 3.64 per cent as against (-) 2.2 per cent in June. The retail inflation in July too had eased to 3.15 per cent over the previous month when it was 3.18 per cent.
The Wholesale Price Index (WPI)-based inflation was at 2.45 per cent in May. It was 5.68 per cent in June 2018. Inflation in food articles basket eased marginally to 6.98 per cent in June, from 6.99 per cent in May.
Experts believe the drop in WPI was unexpected. "It is majorly due to a fall in food inflation. Despite four rate cuts by the RBI, the food inflation is still subdued mainly because of better monsoon. The drop in retail and wholesale inflation clearly states that the 110 bps rate cut transmission is still not observed, keeping a room open for one more rate cut in the future. If not a rate cut then RBI may force banks to reduce their MCLR in order to revive consumer demand," Rahul Gupta, Currency Research Head, Emkay Global Financial Services Limited, said.
Edited by Manoj Sharma