WPI: India’s Wholesale Inflation Falls To 40-Month Low In October

Wholesale inflation in India fell to its lowest in 40 months in October despite a rise in prices of food articles. That’s because fuel and power index continued to contract and core inflation weakened further.

Inflation as measured by the wholesale price index stood at 0.16 percent in October—the lowest since June 2016—compared to 0.33 percent in September, according to data released by the Ministry of Commerce and Industry. A Bloomberg poll of 22 economists had estimated a contraction of 0.24 percent.

Retail inflation, however, rose to 4.6 percent, led by a spike in vegetable prices even as core inflation fell.

Radhika Rao, economist at DBS Bank, said the yawning gap between wholesale and consumer price inflation is “notable”.

Inflation Internals

• Primary articles inflation stood at 6.4 percent against 5.5 percent in September.
• Food articles inflation stood at 9.8 percent compared with 7.5 percent in the previous month.
• The index of non-food articles stood at 2.35 percent against 2.2 percent last month.
• Fuel and power index contracted 8.3 percent against a fall of 7.05 percent in the previous month.
• Manufactured products contracted 0.8 percent against a contraction of 0.4 percent in September.

The further deepening of the disinflation of core-WPI items is along expected lines, underscoring the subdued demand conditions in the economy, and supporting the case for further monetary easing in December 2019, said Aditi Nayar, principal economist at ICRA.