Wholesale Price Index: According to a statement issued by the Ministry of Commerce on Wednesday, India’s wholesale pricing index (WPI)-based inflation dropped to -3.48 percent in May, its lowest level since November 2015, with a beneficial base effect once more taking front stage. The wholesale inflation rate in April was 0.92 percent. The most recent WPI inflation report, at -3.48 percent, is the lowest in seven and a half years. When it registered at -3.68 percent in November 2015, wholesale inflation was last lower. The results show that the wholesale price of food decreased to -1.59 percent in May from 0.17 percent in April.
Significant Decline in Prices Across Various Commodities
The headline retail inflation rate dropped to a 25-month low of 4.25 percent in May, according to statistics ministry figures released a few days prior on June 12. In May, wholesale prices decreased not just year over year (YoY), which led to the sub-zero inflation print, but also month over month, with the WPI’s all-commodity index falling by 0.9%. The index has now dropped by the most since it began in those five months. Vegetables experienced a drop in inflation of (-) 20.12%, while the corresponding figures for potatoes and onions were (-) 18.71% and (-) 7.25%, respectively. However, inflation in wheat was 6.15 percent and pulses experienced a strong increase to 5.76 percent.
Lower Prices and Increased Russian Oil Imports Contribute to Inflation Decline
Inflation in the fuel and power basket decreased to (-) 9.17% in May from 0.93% in April. The commerce and industry ministry stated on Wednesday that the decline in the rate of inflation in May 2023 was principally caused by lower prices for mineral oils, basic metals, food items, textiles, non-food items, crude oil and natural gas, and chemical and chemical products. In fact, during the past year, India has increased its purchases of cheap Russian oil by twofold. This has reduced energy prices and moderated the country’s high inflation, according to Steve Cochrane, chief APAC economist at Moody’s Analytics. Inflation in manufactured goods decreased from (-) 2.42 percent in April to (-) 2.97 percent in the reviewed month. Rahul Bajoria, MD & Head of EM Asia (Ex-China) Economics at Barclays, reported that wholesale prices decreased even more last month as pressures on food, fuel, and core decreased. Bajoria stated that “RBI will want to see headline (and ideally core) CPI inflation moving towards the 4% target on a durable basis, before considering rate cuts.” He added that “we expect retail inflation to be on a moderating trajectory in the near term, which suggests the MPC is likely to be on hold for the rest of the fiscal 2023–24.”
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER
