India’s Wholesale Price Index (WPI) cooled down in February for the ninth consecutive month to 3.85 percent. Reduction in the prices of manufactured goods, fuel, and power drove lower wholesale price inflation, according to data released by the Ministry of Commerce & Industry.
"Decline in the rate of inflation in February 2023 is primarily contributed by fall in prices of crude petroleum & natural gas, non-food articles, food products, minerals, computer, electronic & optical products, chemicals & chemical products, electrical equipment and motor vehicles, trailers & semi-trailers," the ministry said.
The WPI, the price of goods before they are sold in the retail market, has dropped considerably from 13.43 percent recorded in February 2022. The metric is also down from 4.73 percent in January.
Although the wholesale prices of food articles rose month-over-month to 3.81 percent in February, it was still down from 8.19 percent recorded in February last year. The major drivers behind the rise of food articles prices month-over-month were the rise in the prices of paddy, fruits, pulses and milk. The price inflation of vegetables and onions remained in the negative, and prices of potatoes fell into the negative territory last month.
Fuel and power wholesale prices dropped to 14.82 percent from 15.15 percent in January. Wholesale prices of manufactured products fell to 1.94 percent from 2.99 percent in the preceding month.
Meanwhile, the country’s consumer price index (CPI) also reduced from 6.52 percent in January to 6.44 percent in February. This CPI deflation, along with cooling WPI, bodes well for the economy.
However, core inflation continues to remain sticky. The Reserve Bank of India, which had hiked its interest rate by 25 basis points to 6.50 percent in February, is likely to continue to closely monitor the stickiness of the core inflation before the next Monetary Policy Committee meeting.