WPI inflation turns negative for first time since July 2020

India's April wholesale inflation plunged below zero for the first time since July 2020. This is the 11th consecutive month when the wholesale price index (WPI) has declined.

The WPI inflation in April stood at -0.92% as against 1.34% recorded in March.

The drop in the rate of inflation in April is primarily due to a fall in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical & chemical products, rubber & plastic products, and paper & paper products, according to the official data.

Wholesale inflation in manufactured products declined from -0.77% in March to -2.42% in April 2023.

The year-over-year inflation based on the WPI Food Index decreased from 2.32% in March to 0.17% in April.

The Department for Promotion of Industry and Internal Trade (DPIIT) releases index numbers of wholesale prices in India on monthlya basis on 14th ofthe every month (or next working day) with a time lag of two weeks of the reference month, and the index numbers is compareed with data received from institutional sources and selected manufacturing units across the country.

On Friday, India's retail inflation, measured by the All-India Consumer Price Index (CPI), hit an 18-month low of 4.7% in April compared with 5.66% in March on easing food prices. The CPI-based inflation has remained within the Reserve Bank of India’s (RBI) target band of 4%-6% for the second straight month. While rural inflation eased to 4.68% in April from 5.51% in March, urban inflation stood at 4.85% in April as against 5.89% in March.

The inflation rate for vegetables contracted 6.5% in April. Inflation in edible oils and other fats narrowed 12.33%. Fuel and light inflation also moderated to 5.52% in April from 8.91% in March. The inflation rate for clothing and footwear came down to 7.47% in April from 8.18% in March. However, spices saw 17.43% inflation in April followed by cereals at 13.67%. Milk and milk products witnessed 8.85% inflation rate in April. Core inflation eased to 5.7% in April, recording the first sub-6% print after 10 months.

"A favourable base dampened the headline CPI inflation to a lower-than-expected 4.7% in April. Around 90% of the dip was led by food and beverages, fuel and light and miscellaneous items," said Aditi Nayar, chief economist, ICRA. The rating agency expects retail inflation to be range bound at 4.7-5% in May-June 2023.