Potato, onion prices push WPI inflation to 3-month high

New Delhi: India’s annual wholesale price inflation rose to 0.53% in March, the highest in three months, led by increase in prices of food items like onion and potato, official data showed on Monday.

The Wholesale Price Index (WPI) based inflation stood at 0.20 per cent in February and 0.33 per cent in January.

The rate of inflation based on WPI Food Index increased from 4.09% in February to 4.65 per cent in March.

Price of potatoes in the wholesale market surged by 52.96% in March as compared to the same month last year. Onion became costlier by 56.99% year-on-year (YoY)during the month under
review.

During the month under review, the price of vegetables surged by 19.52 per cent, while pulses became costlier by 17.24 per cent. Price of cereals soared by 9.04 per cent in March YoY, data released by the Ministry of Commerce and Industry showed.

“An uptick in the food inflation and a moderation in deflation of core and fuel items pushed the wholesale inflation to a three month high in March 2024,” said Sunil Kumar Sinha, Principal Economist at India Ratings and Research.

Core segment continues to be in a deflationary mode. Prices of core items that exclude food and fuel contracted by 1.1per cent year-on-year in March. This is the 13th consecutive month of deflation in core inflation due to the mellowed commodity prices.

Deflation in basic metals, chemicals, textiles, paper products were in the range of 1.7 per cent and 5.7 per cent in March 2024. Even the fuel and power component of the wholesale price index accounting for 13.15 per cent weight recorded a deflation of 0.77 per cent in March 2024, which is 11th straight month of deflation.

Overall, the wholesale inflation at 0.4 per cent in 4Q FY24 was at a year’s high but still good enough to provide succour to the corporates by keeping the input prices at moderate levels. For FY24 the wholesale prices remained in deflation of 0.7 per cent, lowest since FY16, said Sinha.

With the fading of a supportive base, it is anticipated that WPI inflation will edge up in the upcoming months, said Rajani Sinha, Chief Economist, CareEdge Ratings.

“The recent increase in global commodity prices, particularly driven by higher Brent crude prices and a rise in industrial metal prices, is expected to add to upward pressures on WPI,”