Wholesale inflation narrows to –0.32% in November as deflationary pressures ease

Wholesale inflation for November

India’s wholesale inflation edged up to –0.32 percent in November from –1.21 percent in the previous month, signalling an easing of deflationary pressure even as large parts of the commodity basket remained weak.

The rebound marks a pullback from October’s 12-month low in the Wholesale Price Index (WPI).

A moderation in the pace of decline in primary articles, particularly food items, after months of steep price corrections drove the WPI higher. While wholesale prices remain in negative territory, November’s print indicates that the worst of the deflation may have passed.

Food still drags but the fall softens

Food prices continued to exert the strongest downward pull on wholesale inflation, though the intensity of the decline eased. The food index stayed in contraction but the rate of fall narrowed, as vegetable prices stabilised after earlier sharp collapses.

Vegetable prices were still down more than 20 percent from the year-ago period but this was a marked improvement from October, when prices had plunged nearly 35 percent.

Onion and potato prices remained sharply lower compared with a year ago, reflecting ample supplies and favourable base effects.

Cereals, which supported inflation earlier in the year, slipped into negative territory in November. Wheat prices, after staying elevated through much of the first half of the year, also turned marginally negative. Pulses remained deeply deflationary, extending a trend seen since early summer amid improved availability and lower procurement pressures.

Non-food articles offer some support

Non-food primary articles provided partial counterbalance. Oilseeds prices rose sharply in November on supply-side constraints and firm global cues, pushing inflation in the segment close to double digits.

Minerals inflation also strengthened, reflecting price pressures in select construction- and industry-linked inputs.

Fuel, manufacturing remain subdued

Fuel and power inflation stayed negative for another month, though the pace of contraction moderated.

Crude petroleum and natural gas prices continued to decline year-on-year in line with global oil trends, while petrol and diesel remained cheaper than a year ago.

Inflation in manufactured products, which carry the largest weight in the WPI, eased slightly. Price pressures in manufactured food products cooled sharply, dropping to below 1 percent after remaining in high single digits earlier in the year.

Edible oils also saw a pronounced deceleration after strong gains in the first quarter. Core manufacturing categories such as chemicals, pharmaceuticals, textiles and basic metals showed only modest increase or mild deflation, pointing to limited cost-push pressures.

Price outlook remains benign

With retail inflation also remaining unusually low — below 2 percent in recent months — the easing in wholesale deflation reinforces expectations that overall price pressures are well contained for now, giving policymakers room to remain accommodative even as global conditions stay uncertain.