WPI inflation -ve after three years

New Delhi: With the softening of prices across the board, especially a significant drop in prices for the food segment, India's annual wholesale price index or WPI stood at -0.92 per cent for the first time in nearly three years in April, slipping into the negative territory for the first time since July 2020. However, the WPI showed a significant drop in April, while having risen to 1.34 per cent in March this year, the data released by ministry of commerce & industry showed on Monday.

The data also showed that the all-commodities index of the WPI was unchanged in April from March, while the food price inflation in April dropped significantly to 0.17 per cent from March's 2.32 per cent. "The decline in the rate of inflation was broad based, primarily driven by fall in prices of crude, energy prices, non-food and food articles, " the government said in the statement.

It has been observed that the WPI based inflation has been falling for some time now with the figure dropping to 1.34 per cent in March and it was at 3.85 per cent in February and 4.73 per cent in January. "The manufactured products inflation declined 2.42 per cent slipping deep in the negative zone while primary articles and fuel & power inflation in at 1.6 and 0.9 per cent respectively," the data showed.

In every monetary policy announcement by the Reserve Bank of India (RBI), the monetary policy panel always takes into account the CPI index for arriving at the monetary policy decisions. With the lower CPI print for April, however, indicates that the RBI could keep interest rates unchanged in the June policy depending on how the trajectory pans out until then.

After India Consumer Price Index (CPI)-based inflation softened sharply in April, hitting an 18-month low of 4.70 per cent, the fall in WPI is expected to have a positive impact on retail prices as well in terms of cooling them down.

Analysts predict that the trend will continue this year due to consistent falling prices of some key items. "High-base effect and falling commodity prices will lend downward pressure on WPI inflation this year," said Madan Sabnavis, an economist at Bank of Baroda.