The wholesale price index-based inflation remained in the negative territory for the sixth straight month in April and touched a new low of minus 2.65 per cent, vindicating the call on deflationary trends in the economy.
The latest WPI print is lower than the March reading of (-) 2.33 per cent.
The decline in April WPI could be partly attributed to the fall in food articles inflation which came in at 5.73 per cent – a four-month low. Food articles have weightage of 14.34 per cent in the WPI.
Manufactured products inflation stood at (-) 0.52 per cent as against (-) 0.19 per cent in March.
Fuel, power group inflation stood at (-) 13.03 per cent as against (-) 12.56 per cent in the previous month.
Reacting to the latest WPI reading, apex industry bodies promptly reaffirmed their demand for a rate cut by the Reserve Bank of India. They contended that the benign inflation outlook should provide elbow room for the RBI to continue with growth inducing policies.
Retail inflation for April, announced recently, had come in at a four-month low of 4.87 per cent.
The RBI is now more focused on Consumer Price Index-based inflation than WPI.
Given the downtrend in inflation and low industrial output growth, expectations of rate cut by the central bank in its June 2 policy review meeting have risen.
Federation of Indian Chambers of Commerce and Industry (FICCI) President Jyotsna Suri said that the chamber looked forward to another reduction in repo rate followed by a cut in lending rates by banks.
Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee said the decline of headline inflation for the sixth consecutive month is along expected lines.