India's wholesale inflation edges down to 0.20% in February

Wholesale inflation stood at 3.85 percent in February 2023.

India's wholesale inflation rate edged down to 0.20 percent in February, data released by the commerce ministry on March 14 showed.

Wholesale Price Index (WPI) inflation stood at 0.2 percent in January and 3.85 percent in February 2023.

At 0.20 percent, the February wholesale inflation print is the lowest in four months. The last time WPI inflation was lower was in October 2023, when it came in at -0.26 percent. So far in 2023-24, WPI inflation has averaged -0.8 percent.

Wholesale prices increased at a slower pace in February even though food inflation rose to 4.09 percent from 3.79 percent in January, pushed up by wheat inflation jumping to 2.34 percent after being at -3.14 percent in the first month of 2024. Pulses inflation, too, rose further to 18.48 percent.

On the whole, cereals inflation increased to 6.63 percent from 4.07 percent.

However, no change in the price index of manufactured products - which make up 64 percent of the WPI - in February from January meant inflation for this category declined to -1.27 percent from -1.13 percent.

Also falling deeper in the deflationary zone was the fuel and power category, whose inflation figure came in at -1.59 percent as against -0.51 percent in January.

These two factors - increased deflation in manufacturing products and fuel and power items - more than cancelled out the rise in prices of food.

The WPI data comes two days after the statistics ministry said that India's headline retail inflation stood steady at 5.09 percent in February, as per expectations. However, core retail inflation - which excludes food and fuel items - fell further to 3.3 percent from 3.6 percent in January, as per Moneycontrol's calculations.

Also Read: What does 12-year-low core inflation say about India's growth story?

According to economists, low wholesale inflation - which is a reflection of muted increase in input prices - is helping reduce core Consumer Price Index (CPI) inflation. However, the headline retail inflation rate has not fallen at the same pace and has stayed above the Reserve Bank of India's medium-term target of 4.0 percent for 53 months in a row, thanks to elevated food inflation.

In its February 8 statement, the RBI's Monetary Policy Committee said it will "carefully monitor any signs of generalisation of food price pressures to non-food prices which can fritter away the gains in the easing of core inflation".