For the sixth consecutive month, wholesale inflation contracts were negative in September, at -0.26%
Due to declining food item costs, the wholesale price index-based inflation remained negative for the sixth consecutive month in September at (-)0.26%. Since April, the WPI-based inflation rate has been negative; in August, it was (-)0.52%. The percentage was 10.55 in September of previous year.
After staying over 10% for the previous two months, food item inflation decreased to 3.35 percent in September. In August, it was 10.60 percent.
According to the commerce and industry ministry, “deflation in September 2023 is primarily due to fall in prices of chemical & chemical products, mineral oils, textiles, basic metals, and food products as compared to the corresponding month of the previous year.”
Inflation in the fuel and electricity basket was (-)3.35 percent in September compared to (-)6.03 percent in August. The inflation rate for manufactured goods was (-)1.34%, down from (-)2.37% in August.
The annual retail or consumer price inflation rate was 5.02 percent in September, a three-month low level, according to data published last week.
According to Suman Chowdhury, chief economist and head of research at Acuité Ratings & Research, “India’s wholesale inflation print remains negative at -0.26% in September 2023, albeit tightening from -4.18% in June 2023, respectively. The WPI sequential trend has been maintained at -0.6% MoM thanks to a sharp fall in the rising vegetable costs and generally benign wholesale food inflation that fell by 4.5 percent MoM.
Given strong industrial and consumer demand, rising prices for commodities like crude oil, cereals, and pulses, and the outlook for positive WPI inflation over the next months, he said. This is expected to prevent a substantial decline in CPI inflation during the following two quarters, keeping it in the region of 5.0-5.5 percent. The RBI MPC won’t have much choice except to wait and observe the pricing situation over the remainder of the current fiscal year.
