Key Takeaways
- India’s wholesale inflation rate eased to 0.27% in January, driven by food article prices.
- Experts predict a 0.5% wholesale inflation rate in February.
- The RBI is expected to maintain a pause on the policy rate in the near term due to retail inflation still being higher than its comfort level.
New Delhi: India’s wholesale price index (WPI) based inflation eased to 0.27% in January 2024 from 0.73% in the previous month, data released by Ministry of Commerce and Industry showed on Wednesday.
“Positive rate of inflation in January, 2024 is primarily due to increase in prices of food articles, machinery & equipment, other manufacturing, minerals, other transport equipment etc,” an official release said.
For the third consecutive month, wholesale prices have shown inflation. This comes after a period of deflation from April 2023 to October 2023.
“Like previous month, the push to wholesale inflation again came mainly from food articles which recorded an inflation of 6.85% in January 2024, though down from 9.38% in December 2023. Within food article the items that are contributing significantly to the wholesale inflation are paddy, pulses and vegetables. Within vegetables the item that is bothering consumer is onion,” said Sunil Kumar Sinha (Senior Director & Principal Economist) and Paras Jasrai, Senior Analyst at India Ratings and Research.
India Ratings expects the wholesale inflation to come in at 0.5% in February 2024. In view of retail inflation still being higher than Reserve Bank of India (RBI)’s comfort level, it however expects RBI to maintain a pause on the policy rate in the near term.
As per data released by Ministry of Statistics & Programme Implementation (MoSPI) earlier this week, India’s retail inflation measured by consumer price index (CPI) eased to 5.10% in January 2024 on an annual basis primarily on the back of softening food prices.
