A sharp decline in fuel and power prices and moderate reduction in inflation in manufactured products dragged down the rate of producers’ inflation to nearly 1 per cent in July.

This rate of inflation is technically known as Wholesale Price Index (WPI)-based inflation.

According to data released on Wednesday, the annual rate of inflation, based on the monthly WPI, stood at 1.08 per cent for July, compared to 2.02 per cent in June and 5.27 per cent in July 2018. The build-up inflation so far this fiscal is 1.08 per cent, against 3.1 per cent in the year-ago period.

Data released on Tuesday showed the rate of retail inflation based on the consumer price index (CPI) slipped a tad to 3.15 per cent in July, against 3.18 per cent in June. With both the inflation rates in the subdued zone, there is a strong possibility that the RBI Governor-led Monetary Policy Committee will go for another rate cut in October, when it will meet for its next bimonthly monetary policy review. It has already reduced the policy rate by 110 basis points over four successive reviews.

According to experts, weak commodity prices, a mild appreciation of the rupee as well as a lack of pricing power contributed to the sharp and fairly broad-based fall in core inflation to a 33-month low of 0.2 per cent in July. The fall in core WPI inflation contrasts with the uptick in core CPI inflation in July.

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