New Delhi: Wholesale price inflation rose to a four-month high of 2.36 per cent in October as prices of food items, especially vegetables, and manufactured goods turned dearer, showed the government data released Thursday.
The wholesale price index (WPI) based inflation was 1.84 per cent in September 2024. It was (-) 0.26 per cent in October last year.
As per the data, inflation in food items shot up to 13.54 per cent in October, as against 11.53 per cent in September. This was led by 63.04 per cent inflation in vegetables, as against 48.73 per cent in September.
Inflation in potato and onion remained high at 78.73 per cent and 39.25 per cent, respectively, in October.
Fuel and power category witnessed deflation of 5.79 per cent in October, against a deflation of 4.05 per cent in September. In manufactured items, inflation was 1.50 per cent in October, as against 1 per cent in the previous month.
The month of October witnessed the second consecutive month of rise in WPI inflation print. WPI higher than October’s level was recorded last in June 2024, when it was 3.43 per cent.
“Inflation in October 2024 is primarily due to increase in prices of food articles, manufacture of food products, other manufacturing, manufacture of machinery & equipment, manufacture of motor vehicles, trailers & semi-trailers, etc.” the Ministry of Commerce & Industry said in a statement.
Barclays Regional Economist Shreya Sodhani said perishable food prices, particularly vegetables, are driving both retail and wholesale prices. Manufactured products WPI rose moderately, reflecting the rise in prices of metals in the month.
“The surprise to our estimate was due to a higher-than-expected acceleration in food prices,” Sodhani said.
ICRA Senior Economist Rahul Agrawal said food inflation alone pushed up the headline WPI print by as much as 63 basis points between September and October 2024.
On a year-on-year (YoY) basis, the core WPI print rose to 0.3 per cent in October 2024 from 0.1 per cent in September 2024, while remaining muted.
“Owing to the expected softening in food inflation, ICRA estimates the WPI inflation to ease to approximately 2 per cent in November 2024,” Agrawal said.
Looking ahead, the robust increase in kharif output for most food items and the healthy outlook for rabi crops amid elevated reservoir levels augurs well for the WPI food inflation prints in the near term, even as fertiliser stocks are a monitorable.
However, the outlook for the headline WPI inflation remains vulnerable to movements in global commodity and crude oil prices, Agrawal said.
The consumer price index data released earlier this week showed retail inflation surged to a 14-month high of 6.21 per cent with a sharp rise in prices of food items.
The level is higher than the upper tolerance limit of the Reserve bank of India (RBI), which may make cutting the benchmark interest rates difficult in the policy review meeting in December.
The RBI, which mainly takes into account retail inflation while framing monetary policy, kept benchmark interest rate or repo rate unchanged at 6.5 per cent in its monetary policy review last month.
PTI
