WPI at 13-month low in April on declining food prices
India's wholesale price inflation saw a significant drop in April. It reached a 13-month low, settling at 0.85%. This decline was primarily driven by falling food prices. Data indicates a deflation in primary food articles after 27 months. Fuel and power segments also contributed to this decrease. Experts anticipate further moderation in WPI inflation in the near future.
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New Delhi: India's wholesale price inflation fell to a 13-month low of 0.85% in April as food prices continued its decline, official data released Wednesday showed.The Wholesale Price Index (WPI), which measures change in producer prices, was 2.05% in March and 1.2% in April 2024."This was largely led by primary food articles, which witnessed a deflation after a gap of 27 months, and the fuel and power segments," said Rahul Agrawal, senior economist at ICRA Besides, the deflation in crude petroleum and natural gas also expectedly widened between these months, aided by the continued correction in global crude oil prices, Agrawal added.Paras Jasrai, associate director at India Ratings and Research (Ind-Ra), said, "Benign food inflation along with a sharp decline in fuel and energy prices helped in keeping the wholesale inflation at a tepid level."WPI food inflation fell to a nearly two-year low of 2.55% in April from 4.66% in March.Among key food items, vegetables and pulses inflation contracted by 18.3% and 5.6% year-on-year, respectively, in April. In contrast, fruit prices increased 8.4%.Cereals inflation was at a 42-month low of 3.8% in April due to better Kharif output. While potato prices decelerated by 24.3%, onion prices increased by 0.2%."The easing of food inflation would help in bringing relief to households and the consumption demand as we begin the new fiscal year," said Jasrai.Inflation in manufactured products, which account for 64.23% weight in the WPI, rose 2.6% in April compared to 3.1% in March.Within manufactured products, vegetables & animal oils and fats recorded the highest inflation of 28.7%, followed by food products manufacturing at 9.5%.Inflation in primary articles contracted by 1.4% from a positive 0.8% in March. Similarly, fuel and power inflation decelerated by 2.2% from positive 0.2% in March."The decline in fuel & power and energy prices in April was due to the tariff-tantrum led deceleration in global commodity prices," noted Jasrai.WPI inflation is expected to moderate further, according to experts."Muted commodity prices along with a favourable base effect for the food segment would keep the wholesale inflation around 0.5% in the near term," said Jasrai.ICRA anticipates it to ease slightly to 0.5-0.8% in May."Looking ahead, the India Meteorological Department's (IMD) expectation of an early monsoon onset in Kerala and an above normal monsoon in the country is a positive for crop output, and consequently, the food inflation outlook, although the spatial and temporal distribution of the same remains key," noted Agrawal.
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