With spike in food and vegetable prices, the wholesale inflation has inched up 0.79 per cent in May. A sharp augment of vegetable prices supplemented by the price rise of food articles, may be the reason behind the rise in inflationary pressure. The price of food articles is seen at 7.88 per cent in May as against 4.23 per cent in April. With the firming up of both wholesale and retail inflation the Reserve Bank of India (RBI) may delay the interest rate cut despite a poor industrial output figures.
As per the Government data released on Tuesday, the April Wholesale Price Index (WPI)-based inflation was at 0.34 per cent and in March it was (-) 0.45 per cent while it stood at (-) 2.20 per cent in May last year. Inflation in vegetables stood at 12.94 per cent, a sharp rise from 2.21 per cent, a month earlier. Pulses inflation remained stubborn at 35.56 per cent.
As per the inflation data, prices of egg, meat and fish paced up by 9.75 per cent and in cereals and fruits the rise was 4.60 per cent and 3.80 per cent. However, kitchen staple onion continued to witness decline at (-) 21.70 per cent.
With such trend on price movement on food and vegetables, India Inc calls for an immediate action from the Government. “Policymakers need to address through supply side responses the continuous rise in prices of commodities like pulses, food articles, cereals, wheat and other items,” Assocham Secretary General DS Rawat said.
Experts, however, said a favourable base effect and a good monsoon would lead to some dip in wholesale food inflation in the immediate term. “The trajectory of the WPI inflation would be shaped by global commodity price movements. If crude oil prices sustain at current levels, average WPI inflation is likely to exceed 3 per cent this fiscal,” ICRA Senior Economist Aditi Nayar said.