New Delhi: Inflation based on wholesale price index (WPI) has fallen sharply to nearly five years low at 3.74 per cent in August due to softening prices of food products. Inflation based on WPI was at 5.19 percent in July, 2014 and 6.99 percent in August of the previous year. Inflation in the food article fell to 5.15 per cent in August as against 8.43 per cent in the previous month. Vegetable prices contracted 4.88 per cent, the third continuous month of decline. Onion prices too contracted by 44.7 per cent in August and that of egg, meat and fish by six per cent. However, potato prices rose by 61 per cent during the month.
Inflation in milk was up by 12 per cent and pulses by 7.81 per cent. Inflation in the fruits basket eased to 20.31 per cent in August. However, while WPI has declined considerably, retail inflation based on CPI is still high at 7.8 per cent. “The drop in primary food inflation in August 2014 should be interpreted with caution, as it benefited from a favourable base effect, with inflation at a high 19.2 per cent in August 2013. Lower and delayed sowing in 2014 remains a concern for crop yields and food prices,” said Aditi Nayar, senior economist, at rating agency ICRA. “The Wholesale Prive Index inflation rate is gradually softening. This is a good sign,” said Sidharth Birla, president, FICCI.
