Wholesale inflation stays negative for 7th consecutive month in October
India's wholesale inflation persisted in the deflationary territory for the seventh consecutive month in October, registering at -0.52%, as reported by the Ministry of Commerce on November 14. The Wholesale Price Index (WPI) inflation was -0.26% in September 2023, and 8.67% in October 2022. The recent wholesale inflation figure is lower than economists' predictions, who anticipated it to be around -0.2%.
Retail inflation hits five-month low
The WPI data was released a day after the Ministry of Statistics and Programme Implementation revealed that the overall retail inflation rate dropped to a five-month low of 4.87% in October, a decrease of 257 basis points from July's 15-month peak of 7.44%. The all-commodity index of the WPI experienced a month-on-month (MoM) increase of 0.4% in October, compared to the 0.7% increase for the Consumer Price Index (CPI).
Manufactured products drive wholesale inflation lower
The decline in wholesale inflation in October was primarily due to manufactured products, which account for nearly two-thirds of the WPI and experienced no sequential change in prices. This offset some of the MoM growth observed in the food index (1.01%) and fuel and power (0.65%). Among manufactured products, categories with the most significant MoM price drops included semi-finished steel (-1.2%), edible oils (-0.7%), and rubber and plastic products (-0.5%).
Concerns over sequential rise in key food items
Although wholesale food inflation slightly decreased to 1.07% in October from 1.54% in September, several essential food items witnessed a sequential price increase, such as cereals (0.9%), pulses (2.1%), and eggs, meat, and fish (3.6%). This could be a cause for concern for both the government and the Reserve Bank of India (RBI). However, WPI inflation is not the RBI's mandated target indicator.
