Wholesale inflation falls to historic low of -4.05%

The wholesale prices in the country fell to a historic low at a faster-than-expected annual rate of 4.05 per cent in July, their ninth straight decline and their lowest in at least a decade, mainly driven by weak food and fuel prices, government data showed on Friday.

The wholesale price index-based (WPI) inflation for June stood at 2.40, the data showed.

Vegetable prices declined 24.52 per cent, with potato prices slumping 49.27 per cent.

However, pulses got dearer by 35.75 per cent as against 33.67 per cent in the previous month.

Inflation in fuel and power category stood at (-)12.81 per cent in June.

The manufactured product index inflation was (-)1.47 per cent as against (-)0.77 per cent last month. Prices eased for sugar, beverage, tobacco and tobacco products.

Prices of cotton textile also declined 4.63 per cent, and those of leather and leather products 2.43 per cent.

WPI inflation has been in the negative zone since November 2014. A year ago in July 2014, inflation was 5.41 per cent. During the month, pulses, milk, edible oil, egg, meat and fish turned dearer.

The WPI number follows retail inflation (CPI) data, which had slipped to a record low of 3.78 per cent in July.  

RBI Governor Raghuram Rajan after the monetary policy announcement on August 4 had said the central bank may cut interest rate even out of the policy cycle depending on how macroeconomic indicators play out. "We are waiting for information. There was more need to move fast in the early stages of the turnaround. We will take all information into account and decide whether at times it warrants moving in between policy cycle or it does not," he had said after the policy meet.

RBI mostly tracks the consumer price inflation for its policy decision, and its next review is due on September 29.