Wholesale Price Index in May 2020, slipped into deflation for the first time in 4 years

The wholesale price index (WPI) based inflation in the month of May 2020 nosedived and slipped into deflation for the first time in nearly 4 years. In the month of May 2020, the WPI based inflation declined by (-) 3.2 per cent (prov.), the steepest deflation witnessed since November 2015.

Story: Shivani Sharma
Design: Pragati Srivastava

At the wholesale level, the inflation has cooled off mainly due to broad based deflation seen in all segments viz; primary articles, fuel and power and manufactured products. The rate of inflation based on WPI Food Index decreased from 5.2 per cent in March, 2020 to 2.3 per cent in May, 2020, the lowest in the past 16 months.

Primary articles that have the highest weightage of 22.62 per cent in the WPI basket, have declined for the second successive month. The inflation in the primary articles decreased by 2.9 per cent in May 2020 as against 4.9 per cent in the same month a year ago mainly due to decline in food, crude petroleum and non-food articles.

Inflation in fuel and power has gone into deeper deflation at -19.8 per cent, the lowest since December 2015. There has been considerable fall in prices domestically aided by low global crude oil prices.

The manufactured products registered deflation at -0.4 per cent in May 2020 after 4 months indicating the loss of pricing power of the manufacturers. It was much lower than 1.5 per cent inflation registered in May 2019. Nearly 10 industries registered decrease in prices including manufacture of food products, textiles, printing and reproduction of recorded media, chemicals and chemical products; rubber and plastics products.

Inflation of food items (food articles and food products) further eased to 2.3 per cent in May 2020 from 3.6 per cent in April 2020. Meanwhile, inflation of non-food items (all commodities excluding food items) plunged to (-) 5.4 per cent in May 2020 from (-) 1.5 per cent in March 2020.