India’s wholesale price for the second consecutive month in November, offering further relief on the inflation front. Government data released on Monday showed Wholesale Price Index (WPI) inflation at (-) 0.32% in November, compared with (-) 1.21% in October. In November last year, wholesale inflation was much higher at 2.16%.
The slight improvement came despite a month-on-month rise in prices of some food items such as pulses and vegetables.
According to the industry ministry, the negative inflation rate in November was mainly due to lower prices of food articles, mineral oils, crude petroleum and natural gas, basic metals and electricity on a yearly basis. These categories continued to keep overall wholesale prices under control.
Food articles have been in deflation for eight months in a row, starting April. However, the pace of decline slowed sharply in November. Food deflation narrowed to 4.16%, from 8.31% in October.
, though this was much lower than 34.97% seen in October. Pulses recorded deflation of 15.21%, while potato and onion prices were down sharply by 36.14%and 64.70%, respectively.
Inflation in manufactured products eased to 1.33% in November, compared with 1.54% a month earlier. Fuel and power also remained in deflation at 2.27%, though slightly higher than October’s 2.55%.
ICRA Chief Economist Aditi Nayar said WPI deflation narrowed faster than expected, helped by base effects, a weaker rupee and rising prices of some commodities. She added that WPI inflation could turn positive in December, reaching around 0.5%.
Retail inflation, measured by CPI, rose to 0.71% in November from a record low of 0.25%, mainly due to higher food prices. Still, low inflation this year has given the Reserve Bank of India room to cut interest rates by 1.25 percentage points.
Earlier this month, the RBI reduced the policy rate to 5.25% and cut its inflation forecast to 2%, calling the current phase a rare mix of strong growth and low inflation.