Wholesale price inflation at 8-month high, touches 0.26% this November
India's wholesale price inflation climbed to 0.26% in November. This is the first time it has emerged from the deflationary zone since March 2023, as reported by the Union Commerce Ministry today (December 14). The Wholesale Price Index (WPI) inflation was -0.52% in October 2023 and 6.12% in November 2022, making the current figure the highest in eight months.
Food index drives WPI increase
In November, the WPI increased by 0.5% month-on-month (MoM), fueled by a 1.9% rise in the food index. The most significant boost came from vegetables, with a 16.5% MoM increase in the price index due to a 41.3% jump in the index of onions. Other food items that saw a sequential price increase included fruits (up 1.7%), wheat (1.6%), and pulses (1.4%). They pushed the wholesale food inflation to 4.69% in November from 1.07% in October.
What about manufactured goods?
Costs of manufactured goods underwent little changes, with their index rising just 0.1% MoM. The prices of manufactured products have been steady for nearly three months in a row. They make up roughly two-thirds of the WPI basket.
Nominal GDP growth concerns
Although WPI inflation rose above zero in November, the average WPI inflation for the first eight months of 2023-24 remains negative at -1.33%. Economists widely predict it to average around 1% for the entire year, which could pose challenges for India's nominal GDP growth, assumed to be 10.5% by the 2023-24 Budget for tax collection and other forecasts. However, Chief Economic Advisor V Anantha Nageswaran has suggested that India might be underestimating its GDP growth rate.
