New Delhi: Wholesale prices in India fell for the first time in nearly three years in April as softening global commodity prices eased food, fuel and other input costs for producers. WPI inflation has been on a declining trend for the last 11 months and stood at (-) 0.92 per cent in April. This is the lowest level of the Wholesale Price Index (WPI) since June 2020, when inflation stood at (-) 1.81 per cent.
A negative WPI inflation, technically called deflation, means that overall wholesale prices are falling year-over-year. The higher base of 15.38 per cent in April 2022 also contributed to the decline in wholesale inflation in April this year.
“The decline in rate of inflation in April, 2023 is mainly contributed by decline in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical and chemical products, rubber and plastic products and paper and paper products Ministry of Commerce and Industry said on Monday.
WPI inflation stood at 1.34 per cent in March. April also saw a decline in prices of food, non-food, fuel and power, and manufactured articles. Inflation in food articles eased to 3.54 per cent in April from 5.48 per cent in March.
In food articles category, the prices of cereals, wheat, fruits, milk and eggs, meat and fish declined as compared to the previous month. In April 2023, inflation in Vegetables was (-) 1.50 per cent, Potato (-) 18.66 per cent, Onion (-) 18.41 per cent and Wheat at 7.27 per cent.
Fuel and power basket inflation eased from 8.96 per cent in March to 0.93 per cent in April. Inflation in manufactured products stood at (-) 2.42 per cent, as against 0.77 per cent in March. The decline in WPI is in line with the decline in April retail inflation, which came down to an 18-month low of 4.70 per cent.
In a research note, Barclays said it expects WPI inflation to remain subdued as lower commodity prices lower input costs. Barclays said, “We think the easing of retail inflation (which we expect to continue) is likely to see a pause at the next Monetary Policy Committee (MPC) meeting in August.” that input price inflation is also coming down.”
Last month, the RBI had kept interest rates on hold by keeping the benchmark rate unchanged at 6.50 per cent. It has projected retail inflation to average 5.2 per cent in the current fiscal. The next three-day meeting of the Monetary Policy Committee of RBI is to be held on June 6-8.
Rajni Sinha, Chief Economist, CareAge Ratings, said the deflationary trend is expected to continue for the next 2-3 months, with full-year WPI inflation in the range of 1-2 per cent.
“The lower WPI print could help ease retail inflation, as it has an impact on core CPI inflation,” Sinha said. Raghavendra Nath, managing director, Ladderup Wealth Management, said the fall in the wholesale price index is likely to have a positive impact on retail prices as well in terms of cooling them.