June WPI inflation drops to 14-month low as food prices ease

June WPI inflation drops to 14-month low as food prices ease

based on the index of wholesale prices (WPI) inflation fell to a 14-month low in June, food inflation remained negative and the prices of manufactured goods grew at its weakest pace the last 11 months.

IPM has shown a downward trend since February and stood at less than five months of 2.17% in May.

However, official data released on Friday showed that in June, persistent deflationary pressure in the key food sector began in May.
Subsequently, prices of major crops such as potatoes, vegetables and legumes have experienced significant declines in June. Prices for potatoes fell by 47%, while vegetables saw their prices fall by more than 25% and 21%, respectively.

The sharp drop in prices could be related to the growing movement of farmers turmoil in many parts of Madhya Pradesh and Rajasthan, where farmers complained of increased revenues due to lower prices for their crops.

However, onion prices were down 9% after a 12% drop in May.

The manufacturing segment, which accounts for almost 65% of a peso in the index, saw prices rise by 2.27% in June from 2.55% in May, the slowest in 11 months.

Among the two largest sub-indices of the segment, manufacturing of food products continued to slow inflation, while the base metals saw the rate increase of 7.92%.

Inflation has also continued to decline for the fifth consecutive month. There was an increase of 5.28% compared to an increase of 11.69% in May.

The June figures for the WPI is the second case where wholesale inflation is calculated according to the new series with updated base year 2011-2012.

The new WPI series carries a more recent base year and is now aligned with the Gross Domestic Product (GDP) and Industrial Production Index (IPI) series – also revised -. This allows for a more meaningful comparison of the parameter, including the extent of the GDP deflator.

This base year review also allows the inclusion of commodities (such as natural gas, petroleum coke), whose share in increasing production over time.

Apart from this, the special series suppresses approximate price component by measuring the production price index and, at the same time, makes it less sensitive to changes in tax rates.

In the new WPI series, the number of covered items increased from 676 to 697. A total of 199 new articles were added and 146 articles were abandoned.

Among primary articles, new fruits and vegetables such as radish, carrot, cucumber, bitter melon, mousambi (sweet lime), the Granada, pear and underlying added.

In the ore group, articles such as copper paste, lead concentrate and garnet were added, while copper ore, gypsum, kaolin, dolomite and magnesite were removed. Natural gas has been added as a new element.

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