WPI inflation falls to historic low at 4.05%

India’s wholesale price inflation (WPI) fell to a historic low at 4.05 per cent in July, backed by a huge fall in food and fuel prices, increasing chances of a mid-policy rate cut by the Reserve Bank of India (RBI), and cheering the government, which boasted of bringing in stability in the economy.

The index for food article group declined by 0.6 per cent due to lower price of fruits and vegetables. However, milk, meat, fish and pulses were costlier. The index for non-food article group too declined by 1.3 per cent.

A global slowdown and lacklusture demand in China coupled with softening of food prices helped lower prices of minerals by 26.3 per cent, fuels by 12.8 per cent and food items by 1.16 per cent from a year earlier.

The decline in WPI came on the back of an unexpected lower retail inflation, which also slipped to a record low of 3.78 per cent in July.

“It is a very positive sign as far as we are concerned... This speaks of the stability of economy that we are in. The inflation is under control, the manufacturing figures, IIP figures are quite encouraging, the indirect tax revenue figures are extremely encouraging. Even if you take out additional revenue measures... we still have a significant growth,” Finance Minister Arun Jaitley said.

India Inc said the data boosted chances of an RBI rate cut before the scheduled monetary policy review in late September.