India's annual wholesale inflation continued to be in the negative in May but moved up slightly to (-)2.36 percent from (-)2.65 percent in the previous month, mainly on account of a rise in prices of food articles, official data showed on Monday.
The annual inflation rate based on the Wholesale Price Index (WPI) was recorded at 6.18 percent in May 2014.
During the period under review, the index for food articles was up 3.8 percent in May mainly due to a 22.8 percent increase in prices of pulses and 20.41 percent in that for onions. Potatoes, however, were cheaper by 51.95 percent.
Other important food articles such as fruits, milk and wheat became dearer. Fruits were expensive by 8.65 percent, followed by milk which was costlier by 6.85 percent and wheat lightened the pocket by another 2.79 percent.
Among the other major sub-indices of the WPI, the annual inflation for fuel in May was (-)10.41 percent, data released by the commerce and industry ministry showed.
The prices of liquefied petroleum gas (LPG) fell by 5.18 percent, petrol became cheaper by 11.29 percent and diesel cost came down by 11.62 percent.
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The manufactured products sub-index also declined. It stood at (-)0.64 percent. The primary articles sub-index was marginally down by (-)0.77 percent.
The official data showed that the rise in May was the first time after successive declines during the last seven months.
On a month-on-month basis the annual inflation successively decelerated in the past six months -- from 1.66 percent in October 2014 to (-)0.17 percent in November to (-)0.5 percent, (-)0.95 percent, (-)2.06 percent, (-)2.33 percent and (-) 2.65 percent, respectively, in the next five months.
The marginal rise in the WPI-based inflation comes on the back of retail inflation also gaining momentum.
The consumer price index (CPI) measured by the Central Statistical Office (CSO) inched up to 5.01 percent in May from 4.8 percent in April.
The retail inflation was at 8.33 percent in the corresponding month of 2014.
Indian Inc. welcomed the WPI data and urged the apex bank to continue with its rate easing cycle.
"This should propel the RBI (Reserve Bank of India) to continue with its rate easing cycle to support demand and strengthen the nascent recovery in industrial production," said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).
Banerjee pointed-out that the further softening of food prices during the month dispels the possibility of an upside risk to inflation in the near future accruing from forecasts of deficient monsoon.
"What is more, the administrative measures taken by the government to rein in inflation, which includes ensuring the adequacy of food-stocks, provides hope that inflation would continue to remain range bound and within the specified RBI's target," Banerjee added.
The other major business body Federation of Indian Chambers of Commerce and Industry (Ficci) said that the WPI based inflation continued to be in the negative zone for the seventh consecutive month led by a persistent decline in fuel and manufacturing segment prices.
"Inflation in case of food articles broadly also remained on a downward trajectory, though monsoon has been predicted to be below normal this year," said Jyotsna Suri, president, Ficci.
However, the Associated Chambers of Commerce and Industry of India (Assocham) said that a long term sequential drop of inflation of manufacturing products could adversely impact their pricing power
"With inflation within manageable limits the focus must now shift to reviving basic goods and slowing down of the intermediate goods sector," said Rana Kapoor, president of Assocham.
According to Kapoor, the farm incomes could suffer as a result of a weak monsoon thus impacting the demand for industrial and primary goods.
"Government needs to keep on pushing more ground level reforms and improve implementation so as to realise the economy's true potential," he added.