The Wholesale Price Index (WPI) or the wholesale inflation stands at 0.26 per cent in the month of November 2023, the wholesale inflation turned in the positive territory after being in deflationary zone for the seven consecutive months. The wholesale inflation stood at 6.12 per cent in November 2022. The wholesale inflation in fuel and power stood at -4.61 per cent in November, and similarly the inflation in manufactured products stood at -0.64 per cent. 

“Expectedly, India’s wholesale inflation (WPI) has moved from the deflationary to the inflationary zone, reporting a figure of 0.26 per cent YoY in Nov-03 vs -0.52 per cent YoY in Oct-23. After seven months since Mar-23, wholesale inflation has reverted to the positive domain. Sequentially, the WPI index has risen by 0.53 per cent, the highest since Jul-23 and has been driven by a jump in prices of onions and pulses in particular which has translated to a 2.62% MoM inflation in primary food articles. Wholesale food inflation has increased to 4.69 per cent YoY compared to 1.07 per cent YoY in Oct-23,” Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research.

The dip in the wholesale inflation post Russia-Ukraine was attributed to the sharp rise in the commodity prices owing to the supply chain disruption. With the easing of commodity prices, the wholesale inflation also started sliding down from its peak levels. The positive rate of inflation in November 2023 is primarily due to increase in prices of food articles, minerals, machinery and equipment, computer, electronics and optical products, motor vehicles, other transport equipment and other manufacturing. “We expect WPI inflation to inch up gradually over the next few months, given healthy industrial and consumer demand amidst the backdrop of steady food inflation. This is set to hold CPI inflation in the range of 5.0 per cent-5.5 per cent over the next two quarters. RBI MPC is likely to wait till the middle of next year before taking a decision on any reversal of the current monetary policy,” Chowdhury added.

To put in perspective, the wholesale inflation stood at -0.26 percent in September and 8.67 per cent in October 2022.  Earlier this month the government released the retail inflation which stood at 5.5 per cent in November, which was more than 4.87 per cent retail inflation in October this year.  The retail inflation in November was largely driven by food inflation which was the highest in November at 8.07 per cent in the last three months. 

In the post monetary policy conference, RBI Governor Shaktikanta Das also cautioned about the potential increase in the inflation going forward due to broad based price pressures emanating from less kharif output and uneven rainfall. The apex bank also clarified about its priority of taming inflation first. Das went to add that the RBI is keeping a close track on the inflation and will take actions accordingly. Das also mentioned that the central bank is meticulously monitoring the rabi sowing and the agricultural output coming forward. Similarly, in the US Fed meeting, Jerome Powell also said that inflation is the top priority for the government and the US Fed will not shy away from further tightening if the need arises.