New Delhi/Chennai (IANS) India’s wholesale price index-based (WPI) inflation for December 2022 fell to almost two-year low of 4.95 per cent, owing to sliding food and crude as well as petroleum prices.
WPI-based inflation was 5.85 per cent in November 2022.
Experts also said this would result in a fall in consumer price index inflation in Q4FY23.
“Fall in prices of food articles, mineral oils, crude petroleum and natural gas, food products, textiles and chemicals & chemical products contributed to a slide in wholesale price index-based inflation,” a statement issued by the Union Commerce Ministry said.
The WPI inflation slipped below the 5 per cent mark for the first time since February 2021, when it was at 4.83 per cent.
Reacting to the latest WPI percentage Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research said it continues to drop rapidly and at 4.95 per cent for December 2022 has subsided below 5 per cent for the first time in 21 months.
“This is clearly driven by the moderation in global commodity prices, including that of food. The incremental relief is reflected in the disinflation of primary articles where prices saw a sequential contraction for successive two months at 1.93 per cent and 2.98 per cent in Nov-22 and Dec-22 respectively,” Chowdhury said.
According to Chowdhury, it is also noteworthy that the sequential inflation in manufactured products has remained zero or in the negative zone since August 2022 reflecting a larger slowdown in manufactured goods at global level along with the correction in the input prices.
What’s encouraging to see is the quicker drop in core WPI inflation which declined to 3.19 per cent in Dec-22 from 7.03 per cent in Sep-22.
“The sharper drop in wholesale inflation is likely to translate into a steady downtrend in headline CPI inflation in Q4FY23 unless any new surprises come up. While we continue to forecast another 25 bps of rate hike by MPC (Monetary Policy Committee) in Feb-23, the likelihood of a pause has increased with the latest CPI and WPI data prints,” Chowdhury said.