India’s Wholesale Price Index (WPI) inflation for the month of March recorded a decline of 1.34 percent as compared to March 2022, marking the tenth straight month of decline. The February WPI inflation was recorded at 3.85 percent, making it a significant drop from the previous month.
The decline in the inflation rate in March can be primarily attributed to the fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber and plastic products, crude petroleum and natural gas, and paper and paper products, as mentioned in the Centre’s press release.
Understanding the Wholesale Price Index
The WPI measures the price of a representative basket of wholesale goods in India. The index is divided into three groups, namely primary articles, fuel and power, and manufactured products, with their respective weights of 22.6 percent, 13.2 percent, and 64.2 percent.
Previous Trends in Wholesale Inflation
Earlier in February 2023, wholesale inflation had declined to a 25-month low of 3.85 percent, attributed to easing prices of manufactured items and fuel and power, according to government data.
In January, the WPI-based inflation came in at 4.73 percent, and in December 2022, it was 4.95 percent. However, in November 2022, it rose to 5.85 percent.
Retail Inflation Trends
In addition to the declining WPI inflation, India’s retail inflation also eased to a 15-month low of 5.66 percent in March, as per recent reports.
The food index inflation stood at 2.76 percent in February, which saw a marginal decline in March, where it recorded 2.95 percent.
Implications of Wholesale Price Index Inflation Trends
The inflation data based on the Wholesale Price Index indicates that the escalation of wholesale commodity prices in India has not kept pace with the previous months. There could be various reasons for this, such as reduced production expenses or a drop in demand for particular goods. This downturn in inflation rates may have a positive impact on the general economy, as it could result in lower input costs for companies and eventually lead to a decrease in prices for consumers.
To summarise, the WPI inflation rate in India has been dwindling for ten consecutive months, with the latest being 1.34 percent in March 2023. This decline can be associated with the fall in prices of fundamental metals, food products, textiles, non-food articles, minerals, rubber and plastic products, crude petroleum and natural gas, and paper and paper products. This downward trend could potentially hold positive implications for the general economy.