India's Wholesale Price Index (WPI) Records Deflation At 3.48% In May 2023

India's Wholesale Price Index (WPI) for the month of May 2023 has recorded a significant annual rate of deflation at (-) 3.48%. This figure, based on the all India WPI, reflects a further decline compared to the (-) 0.92% deflation recorded in April 2023.

The deflationary trend in May can be attributed to notable price decreases in mineral oils, basic metals, food products, textiles, non-food articles, crude petroleum & natural gas, as well as chemical & chemical products. These sectors have played a significant role in driving down the overall rate of inflation, highlighting the challenges faced by various industries and the ongoing economic slowdown.

When compared to April 2023, the WPI's month-over-month change was (-) 0.86% in May 2023.

The most recent WPI inflation rate is the lowest since (-) 4.76 percent was recorded in October 2015.

"Decline in the rate of inflation in May, 2023 is primarily contributed by fall in prices of mineral oils, basic metals, food products, textiles, non-food articles, crude petroleum & natural gas, and chemical & chemical products," a government press release stated.

The food index experienced a contraction of 1.59% in inflation rate during May, while the inflation for primary articles decreased by 1.79% during the same period. Additionally, fuel and power inflation saw a notable reduction of 9.17% in May. On the other hand, the inflation in manufactured products, which holds a significant share in the WPI, declined by 2.97% compared to a contraction of 2.42% in April.

The recently released Consumer Price Index (CPI) data for June 2023 has revealed an uptick in retail inflation after five months of decline. The retail inflation rate stands at 4.81%, remaining within the Reserve Bank of India's (RBI) acceptable range of 2-6% for the fourth consecutive month.