Wholesale inflation eases to 25-month low in February

India’s wholesale price-based inflation declined to 3.85 per cent in February, the lowest level in 25 months, helped by easing of price pressure in the manufacturing sector and favourable base effect.

The wholesale price index (WPI)-based inflation has stayed below 5 per cent for the second month in a row. It stood at 4.73 per cent in January.

Inflation for manufactured items, which has 64.2 per cent weight in the WPI, eased to 1.94 per cent in February as compared to 2.99 per cent in the previous month, as per data released by the Ministry of Commerce and Industry on Tuesday.

Primary articles inflation fell to 3.28 per cent in February from 3.88 per cent in the previous month. Fuel & power inflation declined to 14.82 per cent during the month under review as compared to 15.15 per cent in January 2023.

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As per data released by the National Statistical Office (NSO) on Monday, Consumer Price Index (CPI) based retail inflation eased marginally to 6.44 per cent in February as compared to 6.52 per cent in the previous month.

CPI-based inflation, which the RBI follows for its policy action, has remained sticky and above the upper tolerance band of the central bank.

Saket Dalmia, President, PHD Chamber of Commerce and Industry, said softening WPI inflation would help bring down retail inflation in the coming months.

“The softening of wholesale inflation will help retail prices to soften further and boost sentiments of producers to produce more vis-a-vis increased price cost margins,” Dalmia said.

Decline in the rate of inflation in February 2023 is primarily contributed by fall in prices of crude petroleum & natural gas, non-food articles, food products, minerals, computer, electronic and optical products, chemicals & chemical products, electrical equipment and motor vehicles, trailers & semi-trailers, the ministry of commerce and industry said.

WPI inflation print for February looks good partly due to favourable base. WPI-based inflation stood at 13.43 per cent in February 2022.

Wholesale price based food inflation eased to 2.76 per cent in February 2023 from 2.95 per cent in the previous month.

The wholesale price of cereals jumped by 13.95 per cent in February 2023 year-on-year. Wheat became costlier by 18.54 per cent; paddy by 8.60 per cent and pulses by 2.59 per cent in February 2023 when compared with the price of same month last year. Milk price jumped by 10.33 per cent and fruits became costlier by 7.02 per cent during the month under review on a year-on-year basis.

However, vegetables became cheaper by 21.53 per cent. Potato price dipped by 14.30 per cent and onion price plunged by 40.14 per cent in the wholesale market in February 2023 as compared with the price in the same month last year.