Deflationary pressure continued for the sixth month in a row with inflation dropping to a new low of (-)2.65 per cent in April, mainly on account of decline in prices of fuel and manufactured items even as food prices increased.
Inflation, as measured on the Wholesale Price Index (WPI), has been in the negative zone since November, 2014. In April last year, it was 5.55 per cent.
The deflationary trend has bolstered the case for a rate cut by the Reserve Bank, as retail inflation has also eased and industrial production is down, experts said. Industrial output had slowed to 5-month low of 2.1 per cent in March.
Inflation was (-)2.33 per cent in March, (-)2.17 per cent in February, (-)0.95 per cent in January, (-)0.50 per cent in December and (-) 0.17 per cent in November.
In April this year, the manufactured products segment witnessed deflation for the second consecutive month as prices dropped to a record low of (-)0.52 per cent.
Inflation in food articles category stood at 5.73 per cent, from 6.31 per cent in March. For fuel and power, it was (-)13.03 per cent in April.
Potato prices saw the steepest fall at (-)41.14 per cent in April. For vegetables, the decline was (-)1.32 per cent.
However, inflation in pulses was at 15.38 per cent, and for egg, meat and fish at 4.01 per cent during the month.
The February WPI inflation data has been revised downwards to (-)2.17 per cent as against the provisional estimate of (-)2.06 per cent.
The Consumer Price Index based inflation data, released earlier this week, showed retail inflation fell to a 4-month low of 4.87 per cent in April on account of easing food prices.
The data reinforces our expectation of a high probability of 0.25 per cent rate cut in June 2 RBI policy.
– Aditi Nayar, ICRA Senior Economist
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