The wholesale price index(WPI)-based inflation rate has been in the negative zone since April and was at – 0.26% in September, 2023.In October last year,WPI was at 8.67%.
“The negative rate of inflation in October, 2023, is primarily due to fall in prices of chemicals and chemical products, electricity, textiles, basic metals, food products, paper and paper products, etc. as compared to the corresponding month of previous year,” the commerce and industry ministry said on Tuesday.
A negative WPI inflation, technically termed as deflation, means that overall wholesale prices have been falling year-on-year.
As per the data, inflation in food articles eased to 2.53% in October. It was 3.35% in the previous month.
While inflation in vegetables and potatoes cooled to -21.04% and -29.27% respectively, the annual rate of price rise in onion continued to rule high at 62.60% in October.
Pulses and paddy continued to witness high inflation of 19.43% and 9.39% respectively.
ICRA Ltd Chief Economist, Head (Research & Outreach) Aditi Nayar said the WPI deflation widened slightly to 0.5% in October 2023, from 0.3% in September 2023, in year-on-year (YoY) terms. This was led by a sharp turnaround in crude petroleum and natural gas print to a deflation, and a softening in the inflation for primary food articles, mainly vegetables.
The fuel and power basket inflation was at -2.47% in October, against -3.35% in September.
In manufactured products, the inflation rate was at -1.13%, as against -1.34% in September.
Barclays MD & Head of EM Asia Economics, Rahul Bajoria said overall, inflation continues to stay broadly in check, with a stable rupee, manageable energy costs, and a countercyclical tax policy on fuel prices helping keep inflation in a stable range.
“Strong economic growth, coupled with resilient demand, should keep some pressure on inflation, but we see scope for headline inflation, both CPI and WPI, to remain manageable, with some near-term upside risks emanating from volatile vegetable prices,” he said.
ICRA estimates the WPI inflation prints to remain below 3% in the remaining months of FY2024, amid expectations that commodity prices will remain at benign levels unless global demand outlook strengthens significantly.
“Looking ahead, while global commodity prices, including crude oil continued to soften in the ongoing month, the uptrend in domestic prices of most food items as well as an unfavourable base is projected to lead to a turnaround in the WPI to a marginal 0.1% inflation in November 2023 (6.1% in November 2022), after a gap of seven months,” Nayar said.
The WPI remains materially below retail inflation, which is still close to 5%.
The annual retail or consumer price inflation for October hit a 5-month low of 4.87%, data released on Monday showed.
The Reserve Bank’s Monetary Policy Committee (MPC), in its meeting last month held interest rate steady and projected average retail inflation for the current fiscal at 5.4%, lower than 6.7% recorded in 2022-23.