In February, India’s wholesale inflation decreased to 3.85%

On the back of lower prices for manufactured goods, gasoline, and electricity in January, even if food prices remained high, wholesale price-based inflation fell to a more than two-year low of 3.85 %.

This is the ninth month in a row that the “wholesale pricing index” (WPI)-based inflation rate has decreased.

Last year, the “WPI inflation rate was 4.73 percent in January and 13.43 percent in February.”

The commerce and industry ministry stated on Tuesday that the decline in the rate of inflation in February 2023 was primarily caused by lower prices for non-food items, minerals, food products, computers, chemicals and chemical products, motor vehicles, trailers, and electric products.

Economists claimed that a favourable base effect was mostly to blame for the decrease in the pace of price growth and that, moving forward, falling commodity prices will further reduce WPI inflation.

The timing of the monsoon and weather-related variables will, however, determine how food inflation develops in the future.

Despite a slowdown in inflation for manufactured goods, food inflation increased in February from 2.38 to 3.81 percent. From 15.15% in the previous month, the inflation rate for the fuel and power basket decreased to 14.82 percent. Compared to 2.99 percent in January, it was 1.94 percent for manufactured goods.

The slowdown in WPI is consistent with Monday’s statistics on retail inflation, which showed a decline. From 6.52 percent in January to 6.44 percent in February, retail inflation as measured by the consumer price index fell.

The RBI increased the benchmark interest rate by 25 basis points to 6.50 percent in its most recent review of monetary policy, noting that core inflation is still sticky.

According to economists, the RBI will increase interest rates by an additional 25 basis points at its policy review next month.