India’s wholesale inflation, as measured by the Wholesale Price Index (WPI), has shown a marginal increase in March, marking the fifth consecutive month in positive territory after a seven-month stint in the negative zone until October.
According to official data released on Monday, the annual rate of inflation based on the All India Wholesale Price Index (WPI) stands at 0.53 percent for March 2024 compared to March 2023.
The upturn in March’s inflation rate is primarily attributed to rises in the prices of food articles, electricity, crude petroleum and natural gas, machinery and equipment, and other manufacturing sectors.
Economists view this slight uptick in wholesale inflation positively, as it typically encourages manufacturers to increase production.
Last April, wholesale inflation entered negative territory, similar to the initial days of the COVID-19 pandemic in July 2020.
From a peak of 8.39 percent in October 2022, wholesale inflation has steadily declined. It’s noteworthy that wholesale price index (WPI)-based inflation had remained in double digits for 18 consecutive months until September 2022.
The Indian government releases wholesale price index numbers monthly on the 14th of each month (or the next working day), compiling data from institutional sources and selected manufacturing units across the country.
Meanwhile, retail inflation in India saw a slight easing in March to 4.85 percent from 5.10 percent the previous month. Although within the Reserve Bank of India’s (RBI) comfort level of 2-6 percent, it remains above the ideal scenario of 4 percent.
Except for recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively to 6.5 percent since May 2022 as part of efforts to combat inflation. Increasing interest rates is a monetary policy tool typically aimed at curbing demand in the economy, thereby aiding a decline in the inflation rate.
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