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After 17 months of deflation, Wholesale Price Index (WPI)-based inflation turned positive in April. Wholesale inflation edged upwards to 0.34 per cent in April and further to 0.79 in May as shown in Table 1. Within WPI, prices of manufactured goods, which account for roughly 65 per cent of the index, had begun to move upwards in March, after declining for 12 consecutive months, as shown in Table 2. This suggests that the period of deflation, during which corporate top line growth was dragged down, is now over.
Retail inflation, measured by the Consumer Price Index (CPI), also inched upwards to 5.76 per cent in May, after dipping to a low of 4.83 per cent in March. Rising food prices continue to be a source of worry, as shown in Table 3. At the retail level, food and beverages, pulses, meat, fish and eggs seem to be driving up food inflation as Table 4 shows. But with the India Meteorological Department projecting rainfall at 106 per cent of the long-term average this season, a good monsoon could help ease food supplies. This could exert downward pressure on prices going forward. Table 5 shows that not all the gain from lower oil prices was passed on to the end-consumer. The gap between prices at the wholesale and retail levels suggests that much of the gain from lower oil prices was mopped up by the government and oil companies.
