The Wholesale Price Index (WPI) measuring producer price changes was 2.05% in March and 1.2% in April 2024.
“This is largely led by major food items, and the fuel and power segments have witnessed deflation after a gap of 27 months,” said Rahul Agrawal, senior economist at ICRA.
In addition, during these months, deflation of crude oil and natural gas is also expected to expand with the help of continued correction of global crude oil prices.
“Belly food inflation and a sharp drop in fuel and energy prices have helped keep wholesale inflation at moderate levels,” said Paras Jasrai, deputy director of India Ratings and Research (IND-RA).
WPI food inflation fell from 4.66% in March to a low of 2.55% in April. By comparison, fruit prices rose by 8.4% as Kharif produced better. Inflation in April was 3.8% of 42 months. Although potato prices fell by 24.3%, onion prices rose by 0.2%.
“As we start a new fiscal year, the relief of food inflation will help to provide relief to families and consumer demand,” Jasrai said.
Inflation of finished products accounted for 64.23% of WPI, up 2.6% in April and 3.1% in March.
Among finished products, the inflation rate of vegetables and animal oils and fats is the highest at 28.7%, followed by 9.5% of food manufacturing.
Inflation in junior articles contracted 1.4% from positive 0.8% in March. Similarly, fuel and electricity inflation fell by 2.2% from 0.2% in March.
“The decline in fuel, electricity and energy prices in April was due to the decline in tariff rates for lower global commodity prices,” Jasrai noted.
According to experts, WPI inflation is expected to be further moderate.
“The soft commodity prices and the favorable impact on the underlying effects of the food segment will keep wholesale inflation within the 0.5% range in the short term,” Jasrai said.
ICRA expects to relax it slightly to 0.5-0.8% in May.
“Looking forward, the Indian Meteorological Department (IMD) expectations for early monsoon attacks in Kerala and the country’s higher than normal monsoon positive for crop yields, so the food inflation outlook is the same spatial and temporal distribution, the same remains critical,” Agrawal noted.
