Onion, other common items expensive despite fall in headline inflation

 The headline WPI inflation may have come down to negative but several items of common man use like onion, pulses, fruits and milk have seen a sharp annual increase in prices, data analysis indicates.

The inflation measured by the Wholesale Price Index (WPI) was ruling at minus 2.65 per cent for April 2015.

The deflationary trend in the headline number has made the industry chambers and economists including former Finance Minister Yashwant Sinha seek cut in policy interest rates by the Reserve Bank of India (RBI) to stimulate industrial growth which plunged 2.1 per cent in March 2015 from five per cent February.

However, the disaggregate data shows how several items of common man’s use have become expensive.

For instance, the onion prices increased by almost 30 per cent in April, 2015 as compared to the same month last year. Similarly, pulses shot up by annualised 15.38 per cent while fruits by 14.22 per cent, as per the official data.

Likewise, milk is selling higher 7.42 per cent while the inflation for overall food articles was 5.73 per cent, much above the comfort level of the RBI.

The prospects of deficiency in Monsoon and recent increase in the petrol/diesel prices are also likely to exert pressure on the overall inflation, going forward.

These issues, according to analysts, are likely to weigh on the RBI’s policy directions on interest rates when it reviews the credit situation early next month.

It is distress sale of items like potatoes, sugar and some of the manufactured products which had a great impact on bringing down the overall WPI inflation to negative.   

This article was published in various news web portal.