WPI Inflation Soars to 4-Month High of 2.36% in October Amid Surge in Food Prices
India’s Wholesale Price Index (WPI)-based inflation surged to a 4-month high of 2.36% in October, up from 1.84% in September. This rise was primarily driven by a sharp increase in food prices, particularly vegetables, aligning with the recent Consumer Price Index (CPI) data that also reported a 14-month high in retail inflation at 6.2%, spurred by a similar rise in food prices. This marks a significant shift from the lower inflation rates observed earlier in the year.
Wholesale food inflation shot up to 13.54% in October, compared to 11.53% in September. The spike was led by substantial increases in vegetable prices (up 63.04%) and potatoes (78.73%). Other significant contributors included wheat (8.04%), fruits (13.55%), and onion (39.25%), though onion prices showed some deceleration. Cereal, paddy, pulses, and milk prices experienced slight deceleration, providing a mixed picture for the food sector.
Manufactured products, which account for 64.2% of the WPI, saw a slight acceleration in inflation to 1.5% in October, up from 1% in September. Key contributors included manufactured food products (7.77%), vegetable oils (20.16%), and beverages (2.13%). On the flip side, inflation in sectors like tobacco, textiles, and pharmaceuticals slowed.
In contrast, factory gate prices for fuel and power continued to contract, with high-speed diesel and petrol prices falling by 6.23% and 7.35%, respectively. Cooking gas prices, however, saw a sharp deceleration, rising only by 2.57%.
From January to October 2024, WPI inflation showed considerable volatility, with a low of 0.2% in February to a high of 2.74% in May. October’s inflation marks the highest in four months, influenced by persistent food price pressures. The global economic environment has kept commodity prices relatively stable, which has helped prevent broader inflationary pressures despite the food price surge.
Paras Jasrai, Senior Economic Analyst at India Ratings, noted that the ongoing food inflation was the key driver behind the October spike, though core inflation remained benign at just 0.3%. This indicates that while food inflation is a significant concern, other sectors like metals and chemicals are contributing to a stable cost environment for the Indian economy.
| Month | WPI (Y-o-Y %) | WPI Food (Y-o-Y %) |
|---|---|---|
| January | 0.33 | 6.91 |
| February | 0.2 | 7.07 |
| March | 0.26 | 7.05 |
| April | 1.19 | 8.07 |
| May | 2.74 | 9.93 |
| June | 3.43 | 11.14 |
| July | 2.1 | 3.5 |
| August | 1.25 | 3.06 |
| September | 1.84 | 11.53 |
| October | 2.36 | 13.54 |
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