Workers sort onions at the Agriculture Produce Market Committee (APMC) wholesale market in Lasalgaon, Maharshtra, India. (Photographer: Dhiraj Singh/Bloomberg)

WPI Inflation Hits 10-Month Low, Drops To 2.76% In January

Inflation based on wholesale prices fell to a 10-month low of 2.76 percent in January over the previous month on softening prices of fuel and some food items, according to government data released on Thursday.

The Wholesale Price Index-based inflation stood at 3.8 percent in December 2018, and 3.02 percent in January 2018.

WPI inflation stood at 2.74 percent in March 2018.

Inflation in kitchen essentials like potato, onion, fruits, and milk softened in January over the previous month, the data revealed.

However, the rate of price rise in the food basket, as a whole, rose to 2.34 percent in the month under review compared to a deflation (-0.07 percent) in the previous month.

The retail inflation, released earlier this week, too declined marginally to 2.05 percent in January over the previous month on continued decline in food prices, including vegetables and eggs.

The WPI data further revealed that wholesale-based price inflation for “fuel and power” segment fell sharply to 1.85 percent as against 8.38 percent in December 2018, due to easing in prices of motor fuel and LPG.

Also, there was decrease in inflation in manufactured products basket in spite of higher in some items like sugar and apparel.

The Reserve Bank of India, which mainly factors in retail inflation-based Consumer Price Index, had cut the key lending rate by 0.25 percent this month.

The decline in inflation may provide further headroom to the central bank to cut repo rate in the coming months, experts said.

Also read: More India Rate Cuts on the Cards as Core Inflation Eases