India’s wholesale inflation cools to 0.20% in February

India's wholesale inflation rate dipped to 0.20% in February, as per data released by the commerce ministry on March 14. In January, the Wholesale Price Index (WPI) inflation was at 0.27%, while in February 2023, it stood at 3.85%. This marks the lowest wholesale inflation print in four months, with the last instance of lower WPI inflation recorded in October 2023 at -0.26%. For the 2023-24 period so far, WPI inflation has averaged -0.8%.

The inflation in February 2024 was impacted by higher prices of food items, crude petroleum, natural gas, electricity, machinery, equipment, and motor vehicles, trailers, and semi-trailers. On the month-on-month basis, the change in the WPI index for February 2024 was 0.07% as compared to -0.46% in January 2024.

Despite a rise in food inflation to 4.09% in February from 3.79% in January, driven by an increase in wheat inflation to 2.34% from -3.14% in January, the overall wholesale prices saw a slower increase in February. Pulses inflation also rose to 18.48% from 16.06%. Cereals inflation increased to 6.63% from 4.07%.

However, there was no change in the price index of manufactured products, which constitute 64% of the WPI, leading to a decline in inflation for this category to -1.27% from -1.13% in January. Additionally, the fuel and power category saw a deeper fall into the deflationary zone, with inflation figures at -1.59% in February from -0.51% in January.

Some of the important groups that showed month-over-month increases in prices are textiles; pharmaceuticals; medicinal, chemical & botanical products; motor vehicles, trailers & semi-trailers; electrical equipment; tobacco products, etc. Some of the groups that witnessed a decrease in prices are basic metals; other non-metallic mineral products; fabricated metal products (except machinery & equipment); rubber & plastic products; and printing & reproduction of recorded media, etc. in February 2024 as compared to January 2024.

The Primary Articles index rose by 0.22% to 181.4 (provisional) in February 2024 from 181.0 (provisional) in January 2024. Similarly, the Fuel & Power index increased by 0.19% to 155.1 (provisional) in February 2024 from 154.8 (provisional) in January 2024. Conversely, the Manufactured Products index remained steady at 139.8 (provisional) in February 2024 compared to January 2024.

The WPI Food Index, which comprises 'Food Articles' from the Primary Articles group and 'Food Product' from the Manufactured Products group, rose from 178.0 in January 2024 to 178.3 in February 2024. Consequently, the inflation rate based on the WPI Food Index increased from 3.79% in January 2024 to 4.09% in February 2024.

Meanwhile, retail inflation, released on March 12 showed that the consumer price index (CPI) dropped to a four-month low of 5.09% in February compared to 5.10% in the previous month of January. This decline was attributed to a widespread reduction in prices across various goods and services. The reported figure closely matched economists' expectations, with a Reuters poll forecasting retail inflation to ease to 5.02%.