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Wholesale inflation at (-)2.4%, in negative zone for 8th month

InflationDeflationary trends continued for the eighth month in a row in June with the wholesale price- inflation slipping to (-) 2.4 per cent, largely due to cheaper vegetable and fuel prices.

However, pulses turned dearer.

The overall Wholesale Price Index (WPI) based inflation was (-) 2.36 per cent in May, the government data showed Tuesday. It has been in the negative zone since November 2014. A year ago in June 2014, inflation was 5.66 per cent.

The data come a day after the retail inflation for the same month rose to an 8-month high of 5.4 per cent. Experts said the conflicting data would make it difficult to predict the next course of action for RBI, which has cut its rates three times so far this year.

RBI mostly tracks the consumer price inflation for its monetary policy decision, and its next review is due on August 4. The central bank has said it would watch out for the data, including inflation, and the monsoon progress before any change in its policy rates.

Last month, rate of price rise for food items, especially wheat, fruits and milk eased at the wholesale level. Overall wholesale inflation in food category declined to 2.88 per cent compared with 3.80 per cent in May.

However, vegetable prices declined 7.07 per cent, with potato prices slumping 52.40 per cent.

However, pulses got dearer by 33.67 per cent as against 22.84 per cent in the previous month.

Inflation in fuel and power category stood at (-) 10.3 per cent in June.

The manufactured products index inflation was (-) 0.77 per cent as against (-) 0.64 per cent last month. Prices eased for cement, non-metallic mineral products and transport equipment and parts.

According to some experts, RBI may not tinker with the rate in its August policy review as it would rather wait for more data on inflation. It would also wait for banks to pass on the benefit of three rate cuts during the year completely.

Last month, RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and statutory liquidity ratio (SLR) at 21.5 per cent.

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