New Delhi: With the rising food and vegetable prices, wholesale inflation rose to a four-month high of 2.4 percent in October from 1.84 percent recorded a month ago. The reason for price escalation for the month is due to an increase in prices of food articles, manufacture of food products, machinery & equipment items among others, the commerce ministry said on Thursday.
As per the data by the ministry, the wholesale price index or WPI-based inflation witnessed the second consecutive month of rise in WPI inflation print, while it was (-) 0.26 per cent in October last year. “The inflation in food items shot up to 13.54 per cent in October, as against 11.53 per cent in September. This was led by 63.04 per cent inflation in vegetables, as against 48.73 per cent in September,” the data showed.
“Similarly, inflation in potato and onion remained high at 78.73 per cent and 39.25 per cent, respectively in October, while fuel and power category witnessed deflation of 5.79 per cent in October, against a deflation of 4.05 per cent in September. In manufactured items, inflation was 1.50 per cent in October, as against 1 per cent in the previous month,” it showed.
“Inflation in October 2024 is primarily due to increase in prices of food articles, manufacture of food products, other manufacturing, manufacture of machinery & equipment, manufacture of motor vehicles, trailers & semi-trailers, etc.” the ministry said in a statement.
Economists and analysts, however, feel that the rise in inflation is primarily led by the inflation in food items, which surged to 11.6 per cent in October 2024, printing in double-digits after a gap of 25 months. “Food inflation alone pushed up the headline WPI print by as much as 63 bps between September and October 2024,” said Rahul Agrawal, senior economist, at ICRA Ltd.
“The WPI-food inflation print is expected to revert to sub-10 per cent levels in November 2024, amid a favourable base, while remaining elevated in the month. The available data on daily wholesale prices points to a softening in the Y-o-Y inflation prints across 13 of the 22 items in November 2024 so far vis-à-vis October 2024, even as onions and edible oils remain a concern,” Mr Agrawal said.
Looking ahead, he further said that the robust increase in kharif output for most food items and the healthy outlook for rabi crops amid elevated reservoir levels, augurs well for the WPI food inflation prints in the near term, even as fertiliser stocks are a monitorable. “However, the outlook for the headline WPI inflation remains vulnerable to movements in global commodity and crude oil prices,” he added.
Barclays Regional Economist Shreya Sodhani also said perishable food prices, particularly vegetables, are driving both retail and wholesale prices. “Manufactured products WPI rose moderately, reflecting the rise in prices of metals in the month. The surprise to our estimate was due to a higher-than-expected acceleration in food prices,” Sodhani said.
The consumer price index data released earlier this week also showed retail inflation surged to a 14-month high of 6.21 per cent with a sharp rise in prices of food items. The level is higher than the upper tolerance limit of the Reserve Bank of India, which may make cutting the benchmark interest rates difficult in the policy review meeting in December.