India’s wholesale inflation rate eased to 0.20 percent in February, marking a decline from 0.2 percent in January and 3.85 percent in the same month last year, according to data released by the commerce ministry on March 14.
The February figure represents the lowest wholesale inflation print in four months, with the last comparable figure recorded in October 2023 at -0.26 percent. So far in the fiscal year 2023-24, wholesale inflation has averaged at -0.8 percent.
While food inflation saw a slight uptick to 4.09 percent in February from 3.79 percent in January, driven primarily by increases in wheat and pulses prices, overall inflationary pressures remained subdued. Cereals inflation rose to 6.63 percent from 4.07 percent, contributing to the upward trend in food prices.
However, the price index for manufactured products, constituting 64 percent of the Wholesale Price Index (WPI), remained unchanged in February compared to January, resulting in a decline in inflation for this category to -1.27 percent from -1.13 percent.
Additionally, the fuel and power category experienced a deeper fall into deflationary territory, with inflation figures coming in at -1.59 percent, down from -0.51 percent in January.
The latest WPI data follows the announcement by the statistics ministry that headline retail inflation remained steady at 5.09 percent in February, while core retail inflation dropped to 3.3 percent from 3.6 percent in January.
Economists attribute the low wholesale inflation to muted increases in input prices, which have contributed to reducing core Consumer Price Index (CPI) inflation. However, sustained elevated food inflation has kept headline retail inflation above the Reserve Bank of India’s medium-term target of 4.0 percent for 53 consecutive months.
In its February 8 statement, the RBI’s Monetary Policy Committee emphasized its commitment to monitoring any signs of food price pressures affecting non-food prices, which could offset gains in easing core inflation.
