Wholesale inflation cooled to 10.7% in September, aided by base effects

Cooling prices of edible oils, fruits help ease food inflation, but vegetables zoom 39.7% and potatoes 49.8%.

India’s Wholesale Price Inflation (WPI) dropped from 12.4% in August to 10.7% in September, the lowest level in at least a year, with food price rise easing to 8.1% from 9.9% in August and manufactured products inflation moderating to 6.3% from 7.5% a month earlier.   

September marks the eighteenth month in a row that Wholesale Price Inflation has stayed more than 10%. However, this is the fourth straight month that wholesale inflation has eased after hitting a record high of 16.63% in May, with June reporting 16.23%. July’s wholesale inflation rate has been revised upwards from 13.93% estimated earlier to 14.07%. 

Wholesale price inflation surged to new high of 15.9% in May

While the Wholesale Food Price Index eased to 8%, vegetables inflation zoomed to 39.7% in September from 22.3% in August, with potato inflation surging to 49.8%. Cereals inflation also inched up from 11.8% in August to 11.9%, with wheat inflation hitting 16.09%. 

Inflation in fruits, however, cooled to 4.55% from 31.7% in August, as did manufactured food products inflation which dropped to 3% from 5.6% the previous month. Price rise in eggs, meat and fish more than halved from 7.9% in August to 3.6% in September.   

The latest WPI reading should be interpreted cautiously, suggested Bank of Baroda chief economist Madan Sabnavis, as many of the numbers are derived from the high base of September 2021 when wholesale inflation was 11.8%.