India’s wholesale inflation eased to a three month low of 1.89 percent in November from 2.36 percent a month back, aided by easing food prices and a favourable base, according to data released by the government on December 16.
"The arrival of fresh harvests has led to a seasonal correction in food prices... Meanwhile, inflation in manufactured goods remained subdued in November, rising slightly to 2 percent due to an unfavourable base effect from the previous year. Deflation in the fuel and power sector persisted, continuing the trend observed over the past four months," said Rajani Sinha, chief economist, CareEdge.
Primary article inflation eased to 5.5 percent from 8.1 percent in the previous month, as food prices cooled to 8.6 percent from 13.5 percent in the previous month.
Data shared last week showed consumer inflation declining to 5.5 percent in November from a 14-month high of 6.2 percent in the previous month, on cheaper rates of vegetables.
In the wholesale market, vegetable inflation was down to 28.6 percent from 63 percent in the previous month.
Onion prices eased from 39.3 percent to 2.9 percent, but potato prices rose from 78.7 percent to 82.8 percent.
Fuel and power remained in deflation for a fourth consecutive month, as prices eased further to 5.83 percent from 5.79 percent earlier.
Manufactured products inflation remained muted at 2 percent compared with 1.5 percent in the previous month.
"Wholesale core inflation was at a four-month high of 0.5% in November 2024. But it continues to be benign due to a sustained decline in metal prices. However, there was a broad-based uptick in inflation at the sub-sectoral level. Overall, 13 out of the 21 industries within core witnessed a higher inflation in November 2024 compared to the past month," said Paras Jasrai, senior analyst, Icra.
India’s inflation trajectory has been higher than expected, which has delayed reduction in key policy rates by the Reserve Bank of India’s Monetary Policy Committee.
The MPC kept the rates on hold for the eleventh consecutive time at its meeting earlier in December, as it revised India’s inflation forecast upward to 4.8 percent from 4.5 percent projected earlier for FY25.
Experts indicate that WPI is likely to remain muted in FY25.
"ICRA expects the headline WPI inflation to rise to ~2.5-3.0% in December 2024 (+0.9% in December 2023) from 1.9% in November 2024 (+0.4% in November 2023), despite a favourable base. A majority of food items, for which data is released by the Department of Consumer Affairs, have witnessed an uptick in their YoY inflation prints in December 2024 (up to Dec 15, 2024) vis-à-vis November 2024," said Aditi Nayar, chief economist, Icra.
For FY25, inflation will average 2.5 percent in FY25, said Sinha from CareEdge.
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