Wholesale inflation eased into negative territory in October, falling to a 27-month low of –1.21%, driven by a steep decline in food items and softer prices across fuel and manufactured goods. The Wholesale Price Index (WPI) had inched up 0.13% in September and was 2.75% in October last year.
According to PTI, the industry ministry said October’s negative inflation print was due to lower prices of food articles, crude petroleum and natural gas, electricity, mineral oils, and basic metals. Food deflation widened to 8.31% from 5.22% a month earlier. Vegetable prices fell 34.97% in October against 24.41% in September, while pulses recorded deflation of 16.50%.
Manufactured product inflation eased to 1.54% from 2.33% in the previous month, while fuel and power stayed in deflation for the seventh consecutive month at –2.55%, a tad lower than –2.58% in September.
“We expect WPI inflation to remain range-bound due to benign international crude oil prices, comfortable buffer stocks of food grains, and a healthy kharif harvest,” Dr. Ranjeet Mehta, chief executive officer and secretary general at PHDCCI, said.
The steep fall in wholesale inflation can also be attributed to the reduction in Goods and Services Tax (GST), which came into effect on September 22. Retail inflation data released last week showed Consumer Price Index (CPI) inflation dropped to a record low of 0.25% in October, compared to 1.44% in September.
With both WPI and CPI now below the Reserve Bank of India’s lower tolerance band, analysts expect a rate cut at the monetary policy meeting scheduled for December 3–5. In October, the RBI’s rate-setting panel maintained status quo and left the repo rate unchanged at 5.5%.
