Wholesale price-based inflation declined for the third consecutive month to a 25-month low of 1.08 per cent in July, mainly on account of subdued prices of food items, fuel and manufactured products, government data showed on Wednesday.
The wholesale price index (WPI)-based inflation was at 2.02 per cent in June this year and 5.27 per cent in July 2018.
The previous low for WPI inflation was 0.9 per cent in June 2017.
The consumer price index (CPI)-based retail inflation, which the Reserve Bank of India (RBI) takes into account while deciding its monetary policy, eased marginally to 3.15 per cent for July, indicating room for further rate cut in monetary policy in October.
Although the RBI does not take into account the WPI while deciding its monetary policy, steep decline in wholesale inflation rate to 1.08 per cent will strengthen the case for a further rate cut in the next policy decision in October.
The inflation in food articles — with over 15 per cent weightage in WPI basket — stood at 6.15 per cent in July, as against 6.98 per cent in the previous month, data released by the Commerce Ministry showed.
Amongst food articles, potato prices continued to slide during July at (-)23.63 per cent as against (-) 24.27 per cent a month earlier and vegetable prices eased with an inflation print of 10.67 per cent (from 24.76 per cent).
However, prices of fruits moved up by 15.38 per cent during the month as against a meagre inflation print of 1.87 per cent in June this year.
Likewise, wholesale inflation in fuel and power segment (contributing 13.15 per cent) contracted further to (-) 3.64 per cent as against (-) 2.2 per cent in June.