WPI Inflation: India's Wholesale Inflation Falls To -1.21% In October Due To Low Food, Fuel Prices

India's wholesale price inflation (WPI) dropped to -1.21% in October, as revealed by government data on Friday. This decline was largely due to falling prices of food items, fuel, and manufactured goods. In September, WPI inflation was at 0.13%, while it was 2.75% in October the previous year. The industry ministry attributed this negative figure mainly to reduced prices of food articles, crude petroleum, natural gas, electricity, mineral oils, and basic metals.

Food inflation experienced a significant drop with deflation reaching 8.31% in October compared to 5.22% in September. Prices for vegetables, pulses, onions, and potatoes continued to decrease further. Vegetables saw a price reduction of 34.97%, which was a steeper decline than the 24.41% recorded in September. Pulses experienced a deflation of 16.50%, while potato and onion prices fell by 39.88% and 65.43%, respectively.

Impact of GST Rate Cuts

The ministry noted that the decline in WPI inflation was anticipated after the Goods and Services Tax (GST) rates were reduced effective from September 22. Mass-consumption items were moved into lower tax slabs of 5% and 18%. These GST cuts, along with a favourable base effect, have contributed to lowering both wholesale and retail inflation rates.

Manufactured products also saw easing inflation at 1.54%, down from September's 2.33%. This indicates ongoing softening in factory-gate prices. Meanwhile, fuel and power inflation remained negative at -2.55%, slightly better than the -2.58% recorded the previous month.

Retail Inflation Trends

Retail inflation reached a historic low of 0.25% in October compared to September's 1.44%. With both Consumer Price Index (CPI) and WPI showing significant easing, economists anticipate pressure on the Reserve Bank of India (RBI) to contemplate a rate cut during its upcoming monetary policy meeting scheduled for December 3-5.

The overall reduction in inflation rates is seen as a positive development for consumers and businesses alike, potentially leading to increased purchasing power and economic activity across various sectors.