WPI inflation remains in negative territory for 2nd month in a row in Nov

Inflation in manufactured products that carries weightage of over 64 per cent in the index, narrowed to a 14-month low of 1.33 per cent in November

India’s factory-gate inflation, as measured by the wholesale price index (WPI), remained in deflationary territory at -0.32 per cent in November, easing from a 27-month low of -1.21 per cent in the previous month, according to data released by the Ministry of Commerce and Industry on Monday.

 

The softening of deflation was propelled by a favourable base effect, a narrower 2.6 per cent drop in food prices after a record 5 per cent decline in the previous month.

 

It comes after India’s retail inflation inched up to 0.71 per cent in November from a record low of 0.25 per cent in October. This was supported by a favourable base effect and the narrowing deflation in the food basket.

 

According to the WPI data, primary food articles saw a disinflation of -4.16 per cent in November compared to -8.31 per cent in October, led by accelerated inflation for milk (3.35 per cent), and eggs, meat and fish (2.08 per cent) in November relative to the previous month. Moreover, the deflation for paddy (-0.92 per cent), onions (-64.70 per cent), potato (-36.14 per cent), fruits (-0.91 per cent) and vegetables (-20.23 per cent) also narrowed sequentially. 

 

Rajani Sinha, chief economist at CareEdge Ratings, said that while food prices continued to remain in deflation, elevated edible oil inflation has limited further easing in overall food inflation.

 

“This remains a key area to monitor amid weak kharif oilseed sowing and elevated global prices of edible oils. Additionally, the government’s decision to impose a 30 per cent import duty on certain pulses is expected to lend support to prices in the segment,” she added.

 

Inflation in manufactured products that carries a weight of over 64 per cent in the index narrowed to a 14-month low of 1.33 per cent in November.

 

This was led by a deceleration in price increases in manufacture of food products (0.62 per cent), vegetable and animal oil (1.36 per cent), beverages (0.74 per cent), tobacco products (2.49 per cent) and pharmaceuticals (1.39 per cent), among others.

 

Among manufactured items, the deflation in basic metals (-1.23 per cent) continued for the eighth consecutive month in November. On the other hand, inflation for wearing apparel (2.21 per cent) and paper and paper products (1.44 per cent) accelerated during the month. 

 

Core inflation, which excluded the volatile food and fuel items, remained higher at 1.5 per cent in November compared to 0.6 per cent during the same month last year.

 

The possibility of higher growth in the US next year may push commodity prices higher and the rupee may exert some upward pressure on fuel inflation in the coming months, said Sonal Badhan, economist at Bank of Baroda.

 

Aditi Nayar, chief economist at ICRA, said that faster-than-expected narrowing of WPI deflation reflects the base effect, a weakening rupee and rising prices of some commodities.

 

“With further depreciation in the rupee, hardening commodity prices, unseasonal rise in vegetable prices, and softening crude oil, we expect the WPI to move into a year-on-year (Y-o-Y) inflation of around 0.5 per cent in December 2025. Subsequently, it may average above 1.5 per cent in Q4 FY26,” she added.

 

On the external front, Sinha said that global commodity prices are expected to remain broadly benign, supported by oversupply in the global crude oil market and excess capacity in China.

 

“Movements in global base metal prices remain a key monitorable. Overall, WPI inflation appears to have bottomed out in October and is expected to remain largely flat over FY26,” she added.