Food prices rose 8.12% year-on-year last month, slower than an annual rise of 8.80% in January.
The Wholesale Price Index-based inflation fell to 4.7 per cent in May, driven mainly by decline in prices of manufactured items, even as prices of food articles inched up.
For the first time since the new wholesale price index\nseries started in 1995, India's annual rate of inflation turned negative, falling to\nminus 1.61 per cent for the week ended on June 6.
The Consumer Price Index hit the lowest in six months in March at 4.83 per cent.
The wholesale price-based inflation hovered over seven per cent through 2012, down from 10 per cent inflation seen in the previous year, reflecting the impact of tight money policy of the Reserve Bank of India.
Notwithstanding the fact that the country's pharmaceutical (pharma) pricing regulator has allowed a 12 per cent price increase for medicines listed under the National List of Essential Medicines (NLEM) in 2023, analysts and industry insiders predict that the overall domestic pharma industry will only witness a price hike of 5-6 per cent. This is attributed to higher competitive intensity in the market. Krishnakumar V, executive director and chief operating officer (CEO) of Eris Lifesciences, a domestic-focused pharma company, noted that the NLEM segment experienced growth suppression of around 150 basis points due to price reductions during the January to July period this year.
Analysts are of the view that long-term investors could continue to hold the stock, irrespective of the MSCI development.
As per official data released on Wednesday, WPI inflation in the food articles category rose to double digits at 11.91 per cent, driven mainly by price rise in onion, cereals and rice.
Though it eased slightly, prices of food items like rice, wheat pulses and potato showed a rise.
The reading for March WPI inflation was revised to 6% from 5.7% earlier.
Vegetables and fruits have weights of 1.74 per cent and 2.11 per cent, respectively, in the wholesale price index.
The Sensex ended higher by 138 points at 19,367 and the 50-share Nifty advanced 43 points to close at 5,742.
Tata Motors was the top gainer among the Sensex stocks.
The rate of price rise of food items was over 15 per cent during the same week last year.
The rise has been mainly on account of increase in prices of fruits, vegetables, imported edible oils, tea, sea fish, cement and iron and steel and spices, though the index for fuel items declined during the week.
In August, wholesale prices rose 3.74 per cent year-on-year.
The government regulates prices of all other medicines.
Onion prices, however, continued to rule high with 79.78 per cent increase in September.
CARE Ratings, in a report, said it foresees an increase in the retail prices of petrol and diesel in the coming few days, depending on how the oil markets react in the reduction in supply from the cartel.
Wholesale prices, India's main inflation measure, had risen 6.1 per cent in August.
Although the WPI-based inflation has been in the negative for two consecutive weeks, the Consumer Price Index, which measures movement in the prices that consumers pay, reported double-digit increase in May.
In spite of Governor Raghuram Rajan's repeated concerns about inflation, many think there may still be a loosening of stance.
Over 300 new items such as mobile phones and digital cameras would figure in the new wholesale price index that would give a better picture of the price situation. And close to 30 items would be knocked off from the new inflation series expected to be out by December.
Food prices fell for the second consecutive week as food inflation remained in the negative zone at (-)2.90 per cent for the week ended December 31, 2011.
It would not be surprising if India, the world's largest producer of milk, has to resort to imports to meet the elevated summer demand, states Surinder Sud.
The central bank is struggling to do so, after unleashing a panicky expansionary policy after the Lehman crisis.
Food inflation, as measured by the Wholesale Price Index, stood at 6.6 per cent in the previous week.
The rate of price rise of food items stood at 12.68 per cent in the corresponding week of the previous year.
The WPI inflation for September rose to 7.81 per cent, from 7.55 per cent in August.
The wholesale price index inflation is projected at 6.4 per cent for 2017-18.
Finance Minister Pranab Mukherjee termed the rise in food inflation as an area of 'grave concern'.
Overall inflation, as measured on the basis of the Wholesale Price Index, has been revised to 9.04 per cent for March from the original projection of 8.98 per cent.
Debt returns are always negative for investors in India, unless they are willing to take huge risk
In February last year, it was 9.54 per cent.
Declining inflation may present a case for further monetary policy easing.
A sharp rise in prices of fruits, vegetables and other primary items, notably poultry chicken, and costlier manufactured products pushed up inflation by 0.10 per cent to 5.94 per cent for the week ended February 21.
Food inflation, as measured by the Wholesale Price Index, was on a declining trajectory for the previous three weeks.
Wholesale Price Index-based inflation declined to 6.62 per cent in January, however, retail inflation remained in double digits at 10.79 per cent during the month.
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