As a result of base effects, overall inflation decreased to 10.7% in September

Image credit: The Economic Times

India’s wholesale price inflation (WPI) decreased from 12.4% in August to 10.7% in September, the lowest level in at least a year. Food price increases decreased from 9.9% in August to 8.1% in September, and inflation rates for manufactured goods decreased from 7.5% in August to 6.3% in September.

Inflation in wholesale prices has exceeded 10% for the past eighteen months in a row as of September. However, after reaching a record high of 16.63% in May, wholesale inflation has now fallen for four months in a row, with June’s figures coming in at 16.23%. The predicted wholesale inflation rate for July was increased from 13.93% to 14.07%.

According to Bank of Baroda Chief Economist Madan Sabnavis, the most recent WPI data should be regarded with caution because many of the numbers are based on the high base of September 2021, when wholesale inflation was 11.8%.

The sharpest moderation among major product categories occurred in the inflation of primary articles, which decreased from 14.9% in August to 11.7% in September and decreased 1.3% month over month. Fuel and power inflation decreased to 32.6% from 33.7% in August but showed a month over month increase of 0.13%.

According to the Office of the Economic Advisor in the Commerce and Industry Ministry, the price increase of mineral oils, food items, crude oil and natural gas, chemicals and chemical products, basic metals, electricity, textiles, and other items in September 2022 was the main cause of inflation.

Due to the greater base between October 2021 and March 2022, when the rate was over 13%, Mr. Sabnavis anticipates that wholesale inflation may fall below 10% starting in October. However, the “sole threat” to this prospect is a further spike in food costs.

The output of rice, legumes, and vegetables will be reduced this season due to a combination of less area seeded and some damage from the protracted monsoon, so pressure on the food side will persist. Oilseed inflation is currently negative, but given that output is anticipated to be lower, it may reverse, he said.

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