Giving first formal proof of Covid-19 pandemic impact on factories, the Government on Monday reported rate of inflation based on Wholesale Price Index (WPI) at minus 3.21 per cent in May as against positive 0.42 per cent in March.

Issuing authority of WPI, Economic Advisor in the Department for Promotion of Industry and Internal Trade (DPIIT) said that due to limited information available for the month of April, the figure for May has been compared with March. Rate of inflation based on WPI shows whether producers are getting a better price or not. Also, it shows whether there is enough demand in the market as it will reflect in the prices going up or down. However, this has not been now an important tool in policymaking as Government and Reserve Bank of India using the rate of Retail Inflation based on Consumer Price Index (CPI).

Rates of WPI inflation for all three subgroups – Primary Articles, Fuel & Power and Manufactured Products were in negative zones. However, food inflation carved out from Primary Article group was in a positive zone, though lower than March. One reason could be that barring vegetables all items showed the rate of inflation in the positive zone with potato at 52.25 per cent and pulses at 11.91 per cent. All these take the rate of inflation for food articles to 1.13 per cent as against 4.64 per cent in March.

Manufactured products witnessed deflation of 0.42 per cent in May. This decline also proved that more and more pink slips handed over. Also, Micro, Small and Medium Enterprises (MSMEs) have suffered.

Due to the nationwide lockdown imposed since March 25, the ministry had released truncated WPI inflation data for April, with figures of food, primary articles and fuel and power. However, it has advised its field offices to collect price data through electronic means. Accordingly, the final index for the month of April 2020 will be released in next month press note in the light of the updated data received from the selected sources.

“Price data is collected from selected institutional sources and industrial establishments spread across the country online through a web-based portal maintained by the National Informatics Centre (NIC),” the ministry said. The final print of March WPI inflation stood at 0.42 per cent as compared to its provisional levels of 1 per cent reported on April 14, 2020.

It may be noted that the Government’s Statistics Office has not been able to release headline rate of retail inflation based on Consumer Price Index (CPI) and industrial growth based on Index of Industrial Production (IIP) for last two months citing incomplete data collection due to lockdown.

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