India's Wholesale Inflation Cools Amid Rising Food Prices

New Delhi: Despite the spike in food and vegetable prices following input cost pressures, India’s wholesale inflation cooled to a four-month low of 0.20 per cent in February compared with 0.27 per cent in the previous month. The wholesale price index or WPI-based inflation was in the negative zone from April to October and had turned positive in November at 0.26 per cent, while it was 3.85 per cent in February 2023, the government data showed on Thursday.

However, the government also stated that the positive rate of inflation in February 2024 is primarily due to increase in prices of food articles, crude petroleum & natural gas, electricity, machinery & equipment and motor vehicles, trailers & semi-trailers, etc. As per the commerce and industry ministry data, the annual rate of inflation based on all India WPI number is 0.20 per cent (provisional) for the month of February 2024 (over February 2023).

“The food inflation moved up marginally to 6.95 per cent in February from 6.85 per cent in January. Also, inflation in vegetables was 19.78 per cent, up from 19.71 in January. Besides, the WPI inflation in pulses was at 18.48 per cent in February compared to 16.06 in January,” the data showed.

The data further showed that inflation in the “fuel and power” segment contracted further by 1.59 per cent in February against a deflation of 0.51 per cent in January. “The prices of manufactured products, too, declined 1.27 per cent compared to 1.13 per cent in January,” it showed.

While WPI is a key macro data suggesting the price producers get in the wholesale market, the headline retail inflation reflects retail prices and forms the basis for the central bank’s monetary policy actions. Earlier in the week, the government data also showed that retail inflation remained almost unchanged in February at 5.09 per cent compared to the January number and stayed within the RBI’s comfort zone of 6 percent for the sixth month in a row.