India's WPI Inflation Deepens In September For 6th Consecutive Month

India's wholesale inflation continues to be in the deflationary zone, registering -0.26% in September, according to the Commerce Ministry's latest data, defying expectations. In August 2023, wholesale prices stood at -0.52%, a stark contrast to the 10.55% in September 2022. Economists had forecasted a rise to 0.7% for September, but the -0.26% figure has confounded these expectations.

The dip comes on the heels of the Statistics Ministry's announcement on October 12, revealing a three-month low in headline retail inflation, down to 5.02% in September, a significant drop from July's 15-month high of 7.44%. In contrast, WPI inflation increased by 97 basis points during the same period.

While the all-commodity index of the Wholesale Price Index (WPI) also decreased month-on-month by 0.59% in September, it was a smaller decline compared to the 1.1% drop in the Consumer Price Index (CPI). However, an unfavourable base effect offset the fall in prices, mainly due to food items.

In September, the food index of the WPI fell by 4.46% MoM, led by a sharp drop in tomato prices, which had surged 56% MoM in June and 318% MoM in July but plummeted by 73% MoM in September. The overall vegetable index dropped by 37% MoM in September.

However, concerning the government and the Reserve Bank of India, most other food items experienced a sequential price increase, including cereals (1%), pulses (6%), fruits (5%), and milk (0.7%). The fuel and power group of the WPI rose over 2% MoM, and the index of manufactured products, which constitutes nearly two-thirds of the WPI, increased sequentially for the second month in September.

Basic metals saw the most significant price pressures among manufactured products, with edible oils at the opposite end of the spectrum.