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India’s wholesale price inflation rose to a three-month high of 0.53% in March from 0.2% in February, with the food index rising 4.65%, primarily led by cereals prices surging at a 12-month high pace even as the inflation in paddy (11.7%), potato (53%) and onions (57%) accelerated.
Inflation in pulses and vegetables remained elevated at the wholesale level, at 17.2% and 19.5%, respectively, as per the Wholesale Price Index (WPI). Fuel and power as well as manufactured products continued to be in deflation mode, though the level of price declines from a year ago moderated to about 0.8% in March.
On a month-on-month basis, the WPI rose 0.4% — the first such uptick in four months, with the food index up 1.01% and primary articles rising 0.9%. Manufactured products and fuel and power categories were up 0.21% and 0.06%, respectively. The Commerce and Industry Ministry also revised the WPI for January 2024, raising the inflation rate for that month to 0.33% from 0.27% estimated earlier.
Within food articles, there was some relief at the wholesale level from eggs, meat and fish, whose prices slid 1.86%. This is in contrast to retail prices which rose more than 10% for eggs, and over 6% for meat and fish, last month. Milk inflation eased to 4.7% in March, from 5.5% in February, but wheat price rise almost trebled from 2.34% in February to 7.43% last month.
“Positive rate of inflation in March, 2024 is primarily due to increase in prices of food articles, electricity, crude petroleum & natural gas, machinery & equipment and other manufacturing, etc.” the ministry said in a statement.
For the full year 2023-24, wholesale prices remained in deflationary mode, averaging -0.7%, the lowest pace of price rise since 2015-16, said Sunil Kumar Sinha, senior director and principal economist and Paras Jasrai, senior analyst at India Ratings and Research. “While wholesale inflation in the fourth quarter averaged a one-year high of 0.4%, it was still good enough to provide succor to the corporates by keeping the input prices at moderate levels,” they noted.
However, with the flare up between Iran and Israel, and the rise in crude oil prices beyond $90 a barrel, the firm expects the first quarter of 2024-25 to see an average rise of 2.4% in wholesale prices.
“International commodity prices are showing signs of increased pressure. Going ahead, continued escalation in international crude oil prices, heat wave conditions impacting electricity demand and vegetable inflation, remain key causes of concern,” said Bank of Baroda economist Sonal Badhan.
