Wholesale deflation came in at 3.21 per cent In May, government data showed on Monday. The data on wholesale deflation – or the rate of decrease in wholesale prices – comes days after the government put off the release of headline consumer price inflation numbers for April and May due to inadequate data collection on account of the weeks-long countrywide lockdown to curb the spread of the coronavirus pandemic.
The headline numbers for retail inflation for the two months, and industrial output for April were not released “in view of the continued limited transactions of products in the market” during the coronavirus-triggered lockdown and problems in collecting of adequate data, the Statistics Ministry said on Friday.
The Reserve Bank of India (RBI) tracks data on consumer inflation – or the rate of increase in retail prices determined by the Consumer Price Index (CPI) – primarily for formulating monetary policy.
However, some say consumer inflation might not remain the driver of policy due to the rapidly-spreading COVID-19 outbreak.
Last month, the central bank lowered the repo rate – the key interest rate at which it lends short-term funds to commercial banks – to 4 per cent, the lowest on record, to prop up the economy following an emergency meeting of its Monetary Policy Committee. RBI Governor Shaktikanta Das said the economy was expected to contract in the current financial year.
Some economists expected price pressures for food to be moderate over the coming months based on expectations of a normal monsoon.
Many groups of economists have anticipated a further blow to the economy, which was already staring at the worst pace of annual expansion in more than 11 years, thanks to the COVID-19 outbreak.