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WPI inflation: India’s WPI inflation eases to 10.7 per cent in September

Wholesale inflation (WPI) fell to 10.7 percent in September, from 12.41 percent in August 2022.

The number has remained in double digits for the 18th consecutive month, but it is important to note that it has also tempered to an 18-month low.

“Inflation in September 2022 is mainly caused by price increases of mineral oils, foodstuffs, crude oil and natural gas, chemicals and chemicals, base metals, electricity, textiles, etc. compared to the corresponding month of the previous year,” a press release reports. .

Inflation in the food basket fell to 11.03 percent in September, from 12.37 percent in the previous month. The manufacturing goods segment recorded a growth of 6.34 percent.

Primary Articles, an important segment, grew by 11.73 percent.

In the fuel and power segment, the WPI number came in at 32.61 percent, up from 33.67 percent in August.

“The moderation in the inflation rate was led by the decline in commodity prices of base metals, chemicals, textiles and manufactured foods. We expect WPI inflation to decline to single digits from October, aided by a decline in global commodity prices and The effect of declining inflation at the wholesale level could be reflected in retail with some delay as the pass-through to consumer prices is still incomplete,” said Rajani Sinha, chief economist at CareEdge.

“The continued period of excessive post-monsoon rainfall in northwestern and central India is expected to disrupt the supply of perishables and affect the kharif harvest and lead to a slowdown in rabi sowing, creating upside risks for In addition, the recent depreciation of the USD/INR pair would also weigh on the country price of imports in the current month. Nevertheless, we expect WPI inflation to decline to ~~~ in October 2022. 9-10%, helped by a high base (+13.8% in October 2021), placing the first single-digit printout after an 18-month hiatus,” according to a report from ICRA.

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Recently, retail inflation rose to 7.4 percent for the month of September, crossing the upper bound of the RBI tolerance band (2-6 percent) for the ninth consecutive month on rising food prices.

As inflation has been above the RBI’s comfort zone for three consecutive quarters, it will have to submit a report to central government explaining the reasons for the failure. RBI’s letter to the government will also include corrective action the bank will take to control the price increase.

The central bank has been aggressively raising its key rate since May to contain inflation. It has so far raised short-term interest rates by 190 basis points, bringing the repo rate to a nearly three-year high of 5.9%.

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