Wholesale inflation eases to 0.13% in September on benign food prices

This moderation was led by a fall in the prices of primary articles (-3.32 per cent) and the continued deflationary trend in the fuel and power segment

India’s wholesale price index (WPI) inflation eased to 0.13 per cent in September, down from a 4-month high of 0.52 per cent in August, according to the data released by the Ministry of Commerce and Industry on Tuesday.

 

This moderation was led by a fall in the prices of primary articles (-3.32 per cent) and continued deflationary trend in the fuel and power segment. 

 

The easing in wholesale inflation came a day after India’s retail inflation hit a 99-month low of 1.54 per cent, supported by a favourable base effect and a decline in food prices.

 

According to the WPI data, deflation in primary food articles deepened in September at -5.22 per cent, led by a sharp decrease in the prices of vegetable (-24.41 per cent), pulses (-17.19 per cent), potato (-42.24 per cent), and onions (- 63.79 per cent ). However, prices of milk, and protein rich items like eggs, meat and fish accelerated in September from the previous month.

 

 

Rajani Sinha, chief economist at CareEdge Ratings said, “Looking ahead, food inflation is expected to stay moderate, supported by healthy agricultural activity and a favourable base.” However, she cautioned that risks remain from the late withdrawal of the monsoon and heavy rains in certain regions.

 

“Additionally, the rationalisation of goods and services tax (GST) rates is expected to positively influence the overall inflation environment. For FY26, we project WPI inflation to average around 0.1 per cent”, she added. 

 

Data also showed that inflation in manufactured products, carrying a weightage of over 64 per cent in the index, eased to 2.33 per cent in September from 2.55 per cent a month earlier. This was led by a deceleration in price increase in manufacturing of rubber and plastics products (0.23 per cent), pharmaceuticals, medicinal chemical and botanical products (1.18 per cent), leather and related products (1.84 per cent), among others. The deflation in basic metals continued for the 6th consecutive month in September, albeit at a slower pace.

 

On the other hand, price increase of manufacture of food products (4.56 per cent), textile (1.69 per cent), and non-metallic mineral products (2.53 per cent) accelerated during the month. 

 

Driven by the continued decline in global crude oil prices, fuel and power prices continued their deflationary trend, falling 2.58 per cent year-on-year, with mineral oils (-0.54 per cent) and coal (-0.15 per cent) easing even as electricity  (1.20 per cent) recorded a month-on-month rise. The price of minerals (1.36 per cent) and crude petroleum & natural gas (0.64 per cent) increased in September as compared to the previous month. 

 

Sonal Badhan, Economist at Bank of Baroda, said that the ongoing US-China trade tensions and the US government shutdown are dampening global fuel demand prospects. “If this trend continues, it may exert downward pressure on fuel inflation in the coming months, thus bringing the headline inflation further down”, Badhan noted.

 

Echoing a similar view, Sinha said global commodity prices are expected to remain largely benign amid weak global growth prospects, excess capacity in China, and OPEC’s decision to raise crude oil output. “However, close monitoring of geopolitical developments and trade dynamics will be crucial,” she added.