Contraction rate of June WPI narrows down sharply  

The contraction rate of India's wholesale price inflation sharply narrowed down in June on a sequential basis, official data showed on Tuesday.

Accordingly, the index numbers of wholesale price showed the inflation rate of June at (-) 1.81% from (-) 3.21 % in May 2020.

However, the Centre did not release the complete set of WPI figures for June, due to the COVID-19 outbreak and its impact on data collection.

Besides, the data showed that annual WPI Food Index rose to 3.05 % in June from a rise of 2.31 % in May.

In a statement, the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade said: "The annual rate of inflation, based on monthly WPI, stood at (-1.81 %) (provisional) for the month of June, 2020 (over June, 2019) as compared to 2.02% during the corresponding month of the previous year."

On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, declined (-) 1.21% from (-) 2.92 % in May.

"The index for this major group increased by (2.28%) to 139.3 (provisional) in June, 2020 from 136.2 (provisional) for the month of May, 2020," the statement said.

"Prices of 'Crude Petroleum & Natural Gas' (16.30 %), Food Articles (1.97 %) and Non-Food Articles (1.71 %) increased as compared to May, 2020. Prices of Minerals (-1.72 %) declined as compared to May 2020."

Besides, on manufactured products' WPI, the data showed a rise to 0.08 % from (-) 0.42 %.

The cost of the fuel and power category rose (-) 13.60 % against a fall of (-) 19.83% in May 2020.

"The index for this major group increased by (5.50 %) to 88.3 (provisional) in June 2020 from 83.7 (provisional) for the month of May, 2020," the statement said.

"Prices of Mineral oils group (12.54 %) increased compared to month of May, 2020. Prices of Coal and Electricity remain unchanged."

According to Aditi Nayar, Principal Economist, ICRA: "As expected, the extent of the disinflation in the WPI narrowed sharply in June 2020, with all the major sectors except minerals displaying a sequential uptick in their YoY inflation relative to the print for May 2020. The smaller disinflation in fuel and power, led by mineral oils, was the chief driver of the uptrend displayed by the headline WPI print in June 2020."

"The divergence between the food inflation at the wholesale and retail level narrowed considerably while remaining substantial in June 2020, pointing to the continued varied dynamics driving food prices as the country emerges from the lockdown. With vegetable prices rising sharply in the recent weeks, the uptick in wholesale food inflation may continue in July 2020," Nayar added.