Data released by the commerce and industry ministry on Tuesday showed inflation, as measured by the wholesale price index (WPI), fell 0.5% in October, compared to 0.3% in the previous month.The ministry said the negative rate of inflation in October, 2023 is primarily due to fall in prices of chemicals and chemical products, electricity, textiles, basic metals, food products, paper and paper products, compared to the corresponding month of previous year.
The food articles group rose 2.5%, slower than the previous month’s 3.4%, while vegetable prices fell 21% during the month. Onion prices continued to remain under pressure, rising an annual 62.6% in October compared to 55.1% in the previous month. The fuel and power group contracted 2.5% during the month compared to a decline of 3.4% in the previous month. The manufactured products group fell 1.1% in October compared to 1.3% in the previous month.
Latest data showed retail inflation eased to a four-month low in October to 4.9% as some food prices moderated. Experts expect the Reserve Bank of India to start cutting interest rates by August next year, depending on the inflation trajectory.
“Since the beginning of this fiscal, wholesale Price Index has remained in deflationary zone, helped by a favourable base and downtrend in commodity prices. The trend extended in October with WPI contracting by 0.5%, with continued annual deflation in manufactured products and fuel and power categories,” said Rajani Sinha, chief economist at ratings agency CareEdge.
“However, sequentially there was some uptick partly due to higher food prices led by cereals, vegetables and protein items. The deflationary trend in WPI could end in the coming months with the support of favourable base fading away gradually and expectation of subdued commodity prices amid global demand weakness. However, for the full year, we expect WPI inflation to average below 1%,” said Sinha.