India’s wholesale prices stayed in deflationary mode for the sixth month in a row this September, albeit only fractionally with inflation at -0.26% compared to -0.52% in August. Wholesale price inflation stood at 10.55% in September 2022, creating a high base effect.
Price rise in primary articles and food items eased sharply to 3.7% and 1.5%, respectively, from 6.34% and 5.62% in August. Wholesale inflation in primary articles a year earlier was 11.5%, while that for food items was 11%.
However, within food items, the price rise in onions accelerated to cross 55% in September from 31.4% in August, while inflation in pulses sped to 17.7% from 10.45% in the previous month. Milk inflation hit a three-month high of 8.6%, while fruit prices broke a three-month declining streak to rise 6% in September.
Vegetables’ prices, which had risen a sharp 67.6% and 48.4% in July and August, slid 15% in September, bringing some relief, but the price rise in cereals and wheat hardened to 7.3% and 6.3%, respectively. Paddy inflation slowed fractionally to 9% from 9.2% in August.
The year-on-year decline in fuel and power costs and manufactured products’ prices almost halved from August to -3.35% and -1.34%, respectively. Fuel and power inflation stood at 33.1% in September 2022. Within this segment, petrol prices rose for the first time since April but at a slight pace of 1.24%.
The surge in global oil and gas prices led to a sharp rebound in crude petroleum and natural gas inflation which hit an eight-month high of 15.6% in September from -1.9% in August. Natural gas prices rose 29.6%, the fastest in four months, and petroleum prices rose to a nine-month high of 10.8%.
On a sequential basis, the Wholesale Price Index (WPI) declined 0.6% from August, breaking a two-month streak of rising price levels, thanks largely to a 4.5% dip in the Food Index and a 3.8% drop in primary articles’ prices. Fuel and power prices as well as manufactured products rose sequentially for the second month in a row, with the former rising 2.3% in September, and the latter by 0.36%.
“Deflation in September, 2023 is primarily due to fall in prices of chemical & chemical products, mineral oils, textiles, basic metals and food products as compared to the corresponding month of previous year,” the Commerce and Industry Ministry said. The Ministry revised the wholesale inflation rate for July from its earlier estimate of -1.36% to -1.23%.
With retail inflation moderating to 5.02% in September, the gap between Consumer and Wholesale inflation slid to a six-month low of 5.48%, compared to 8.67% in July and 7.35% in August. Despite a sequential rise in food prices so far this month, rating agency ICRA expects overall wholesale prices to remain in deflationary territory in October as well.
