India’s Wholesale Price Inflation Moderates To 2.26% In February

India’s wholesale inflation eased sharply in February due to lower vegetable prices.

Inflation as measured by the wholesale price index fell to 2.26 percent in February—from 3.1 percent in the previous month, according to data released by the Ministry of Commerce and Industry on Monday.

“The considerable decline in the WPI inflation in February 2020 is in line with our forecast, led primarily by food items, as well as a modest contribution of the correction in prices of crude oil and minerals, which would intensify in the ongoing month,” Aditi Nayar, vice president and principal economist at ICRA Ltd., said, adding that an expected decline in the prices of crude oil and various commodities, the pass through of the same to core-WPI, and a continued correction in prices of some vegetables would result in the WPI inflation declining to under 1 percent in March.

Higher duties on petrol and diesel will help to shore up government revenues, while preventing a sharper easing in inflationary pressures, she said.

A Bloomberg poll of economists had pegged the figure at 2.43 percent.

Retail inflation in February also fell to 6.58 percent, easing for the first time in seven months.

Inflation Internals

• In February primary articles inflation stood at 6.71 percent against 10.01 percent in January.
• Prices of food articles stood at 7.79 percent compared with 11.51 percent in the previous month.
• The index of non-food articles stood at 6.82 percent against 7.05 percent last month.
• Fuel and power index contracted 3.38 percent against 3.42 percent in January.
• Manufactured products inflation was at 0.42 percent in February 2020 from 0.34 percent in January.