March wholesale inflation drops to 29-month low of 1.34%

India's Wholesale Price Index (WPI)-based inflation dropped to 1.34% (provisional) in March 2023 (over March 2022) against 3.85% recorded in February 2023, thanks to easing prices of manufactured products and fuel items, the data shared by the Ministry of Commerce & Industry shows.

India's WPI-based inflation fell for the 10th straight month and hit the 29-month low in the month of March 2023, the data shows. In January 2023, the WPI inflation stood at 4.80%.

"Decline in the rate of inflation in March 2023 is primarily contributed by fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum & natural gas and paper and paper products," says the ministry.

Despite easing inflation in fuel items and manufactured products, the wholesale inflation in food articles spiked to 5.48% in March 2023 from 3.81% in February 2023. In the primary articles basket, the wholesale inflation in cereals, paddy and wheat stood at 9.48%, 7.54% and 9.16%, respectively. The wholesale inflation in milk stood at 8.48%.

In the fuel & power basket, the overall inflation declined to 8.96% from the previous month when it was 14.82%. In this, the wholesale inflation for LPG and petrol stood at 3.31% and 6.48%, respectively. The wholesale inflation in manufactured products shrunk by 0.77% in March as compared to 1.94% in February.

As per the government, the WPI-based inflation rate of petroleum products, food and manufactured articles declined significantly from April 2022 to March 2023. Several supply-side measures have been taken by the government to address inflation and to ensure that the poor do not have to bear the extra financial burden, minister of state in the Ministry of Finance, Pankaj Chaudhary, said in the Lok Sabha last month.

These measures include “a reduction in excise duty on petrol and diesel, prohibition of the export of wheat products under HS Code 1101, imposition of export duty on rice, maintenance of buffer stock for onion and pulses, imposition of stock limits on edible oils and oil seeds, monitoring of stocks declared by entities to prevent hoarding and also requisite changes in trade policy instruments."

The easing of wholesale inflation is in line with lower retail inflation numbers for March 2023. India's retail inflation further cooled to 5.66% in March 2023 from 6.44% in February 2023, on easing food inflation. With this, the CPI-based inflation fell within the Reserve Bank of India’s (RBI) target band of 4%-6%.

The headline inflation eased to 5.51% in rural areas and 5.89% in urban areas. The monthly changes in all India CPI inflation for the month of March 2023 stood at 0.23%. The retail inflation had eased marginally to 6.44% year-on-year in February as compared to 6.52% in January, though it stayed above the RBI's upper threshold limit of 6% for the 2nd straight month.