India’s wholesale inflation marginally grew to 1.84% in September from last month’s 1.31% on the back of higher food prices, as per the latest provisional data released by the commerce ministry on Monday. The wholesale price index (WPI) witnessed a slight contraction of -0.1% in September 2023. August recorded the lowest wholesale inflation in 4 months after a 2.04% WPI inflation recorded in July.
“Positive rate of inflation in September 2024 is primarily due to increase in prices of food articles, food products, other manufacturing, manufacture of motor vehicles, trailers & semi-trailers, manufacture of machinery & equipment, etc,” the official release read.
Wholesale prices have risen above 1% since April, indicating a steady increase in factory commodity prices. However, wholesale inflation in FY24 averaged -0.7%, with deflation recorded in seven of the 12 months.
Unlike the Consumer Price Index (CPI), the Wholesale Price Index (WPI) measures price changes in goods traded in bulk by wholesale businesses, focusing on factory gate and retail prices. In India, the WPI comprises three categories with varying weights including Primary Articles (22.6%), Fuel and Power (13.2%), and Manufactured Products (64.2%).
Wholesale inflation for primary articles accelerated to 6.59% in September, compared to 2.42% in August. Manufactured product inflation slowed to 1%, down from 1.22%, while inflation in fuel and power declined by 4.05% after a 0.67% fall in August.
In terms of month-over-month changes, the primary articles index rose 0.41%, led by increases in minerals, non-food articles, and food articles. Fuel and power prices dropped 0.81%, with electricity costs rising but mineral oil prices falling. The manufactured products index rose 0.14%, with 10 groups showing price increases and 9 groups seeing declines.
In its latest bulletin, RBI flagged volatility in food prices as a risk despite recent easing in retail prices, which may boost private consumption. The MPC left its inflation forecast for FY25 unchanged at 4.5%, expressing caution over food prices and geopolitical tensions that could affect core inflation and crude prices. The MPC also retained the repo rate, shifting its stance to "neutral" for greater policy flexibility.
