New Delhi: India’s wholesale prices declined for a third straight week, giving finance minister Pranab Mukherjee scope to spend more in next week’s budget to spur growth.
The benchmark Wholesale Price Index fell 1.3% in the week to 20 June from a year earlier after tumbling 1.14% in the previous week. Paras Jain / Mint
The benchmark Wholesale Price Index fell 1.3% in the week to 20 June from a year earlier after tumbling 1.14% in the previous week, the government said on Thursday. Prices plunged 1.61% in the first week of June, the biggest drop since December 1978, according to central bank data.
Tepid inflation enabled Indian policymakers to cut interest rates six times since October and unveil three stimulus packages, providing the economy with a boost worth 7% of gross domestic product (GDP). Price pressures may soon re-emerge after the government raised retail fuel prices to narrow losses at state-run refiners.
Inflation will not remain negative for very long, said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd, the local unit of Standard and Poor’s. The fuel price increase will reduce the negative spell.
India is not in the grip of deflation as food price inflation continues to be in double digits, according to Reserve Bank of India governor D. Subbarao. The bank will review its 4% inflation target for the year to March, he said.
Consumer prices paid by farm and rural workers jumped 10.21% in May from a year earlier after rising 9.09% in April. Consumer prices paid by industrial workers rose 8.63% in May from a year earlier after gaining 8.7% the previous month, according to government data.
The wholesale price index published on Thursday may be revised in two months after the government receives additional data. The commerce ministry on Thursday revised the rate for the week ended 25 April to 1.75% from 0.7%.