India’s wholesale inflation drops to three-month low of 1.9% in Nov

India’s wholesale price index (WPI) inflation dropped to a three-month low of 1.89% in November 2024, down from 2.36% in October, and 1.91% in September, according to the data released today by the Ministry of Commerce & Industry. The softening of inflation in November was primarily due to a decline in prices of food articles, food products, other manufacturing, textiles, machinery & equipment, etc. However, in November 2023, WPI inflation stood at 0.39%.

The data revealed that inflation in food articles eased to 8.63% in November, down from 13.54% in October. This was majorly due to a notable dip in vegetable prices, which declined by 28.57%, compared to 63.04% in October. Onion prices also slowed significantly, declining by 2.85% in November 2024, down from 39.25% in October.

Inflation in manufactured products increased to 2% in November, compared to 1.5% in October. In contrast, inflation in the fuel and power category marginally eased to 5.83% in November, compared to 5.79% in October.

Rahul Agrawal, senior economist, ICRA Limited noted that the moderation was majorly driven by primary food articles, which eased to a three-month low, contributing a downward pressure of 91 basis points on the headline figure between these months. “All the other items witnessed an uptick in their inflation readings in November 2024 vis-à-vis October 2024,” states Agrawal.

Highlighting that the core WPI inflation rose to 0.5%, Agrawal shares, “The core (non-food manufacturing) WPI inflation inched up to 0.5% in November 2024 from 0.3% in October 2024, while remaining below 1.0% for the fourth consecutive month. The core inflation prints have largely remained subdued, averaging at just 0.4% during April-November 2024, which along with the benign prints in primary non-food articles and crude petroleum and natural gas, has contained the uptick in the headline WPI inflation during this period, despite elevated food inflation.”

ICRA expects that the headline WPI inflation to increase to 3%, despite a favourable base effect. “A majority of food items, for which data is released by the Department of Consumer Affairs, have witnessed an uptick in their YoY inflation prints in December 2024 (up to Dec 15, 2024) vis-à-vis November 2024. Additionally, the YoY deflation in global commodity and crude oil prices has also narrowed between these months, while the USD/INR pair has depreciated mildly, which would exert some upward pressure on the landed cost of imports,” he notes.

Shedding light on the arrival of kharif crops, he adds, “Looking beyond the ongoing month, the arrival of kharif crops in the market, and the robust outlook for the rabi crop amid healthy sowing trends and elevated reservoir levels, augur well for the food inflation outlook. However, the extent of the seasonal dip in food prices remains a key monitorable."