New Delhi, Aug 14 (IANS): Lower prices of key motor fuels along with food articles softened annual rate of inflation, based on wholesale prices, to 1.08 per cent in July from 2.02 per cent in June.

Similarly, the Wholesale Price Index (WPI), released by the Ministry of Commerce and Industry, showed a decelerating trend year-on-year as inflation had risen to 5.27 per cent in July 2018.

"The annual rate of inflation, based on monthly WPI, stood at 1.08 per cent (provisional) for July (over July 2018) as compared with 2.02 per cent (provisional) for the previous month and 5.27 per cent during the corresponding month of the previous year," the Ministry said in its review of "Index Numbers of Wholesale Price in India" for July.

The build-up inflation rate in FY20 was 1.08 per cent against 3.1 per cent in the year-ago month, it said.

On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 5.03 per cent from 6.72 per cent.

The prices of food items increased at a slower rate of 6.15 per cent from 6.98 per cent.

The cost of fuel and power, which commands 13.15 per cent weightage, deflated to 3.64 per cent from 2.20 per cent.

On a YoY basis, expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 5.03 per cent from 2.04 per cent. On the other hand, prices of food items increased at a faster rate of 6.15 per cent from (-) 2.1 per cent.

While price of potatoes declined 23.63 per cent, onion increased 7.63 per cent. Overall vegetable prices in July rose 10.67 per cent against decline of 13.58 per cent in the year-ago month.

The cost of fuel and power category declined 3.64 per cent against a rise of 18.1 per cent YoY. Among motor fuels, price of high-speed diesel declined 3.72 per cent from 22.84 per cent YoY, petrol fell 5.02 per cent from 20.75 per cent.

Expenses on manufactured products registered a 0.34 per cent rise against 4.53 per cent.

On Tuesday, another set of official data showed that retail inflation in July softened a bit to 3.15 per cent from 3.18 per cent in June, and 4.17 per cent year-ago on lower fuel prices.

According to the National Statistical Office (NSO) data, the consumer food price index (CFPI) increased 2.36 per cent in July against 2.25 per cent in June and 1.30 per cent in July 2018.