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6h ago

Wholesale Inflation Turns Negative in June as Consumer Prices Fall to Six-Year Low

Declining producer and consumer prices allowed the central bank to reduce its benchmark rate to 5.50 percent before adopting a neutral stance.

Customers buy fruits and vegetables at an open air evening market in Ahmedabad, India, August 21, 2023. REUTERS/Amit Dave/File Photo
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Overview

  • Wholesale inflation based on the WPI slipped to –0.13% in June, marking the first producer-level deflation in 14 months driven by broad declines in food articles, mineral oils, basic metals, crude petroleum and natural gas.
  • Food articles recorded a 3.75% deflation in June, led by a 22.65% plunge in vegetable prices, while the fuel and power index fell 2.65% year-on-year.
  • Consumer price inflation eased to 2.1% in June, its lowest reading since January 2019 and the fifth straight month below the RBI’s 4% midpoint target, supported by softer food cost rises and favorable base effects.
  • In early June, the Reserve Bank of India cut its policy repo rate by 50 basis points to 5.50%, shifting its monetary stance to neutral after citing sustained disinflation.
  • The RBI revised its FY26 inflation forecast down to 4.0%, with quarterly averages of 3.6%, 3.9%, 3.8% and 4.4%, and signaled close monitoring of core inflation and weather-related crop risks.