India’s wholesale price index (WPI) inflation has reached a 6-month high at -0.26% in September, marking the sixth consecutive month of deflation. This data, released by the commerce ministry, shows a significant shift from August 2023 when WPI inflation stood at -0.52%, and September 2022 when it was at a substantial 10.55%.
Economic Trends
WPI Inflation Remains in Deflationary Zone
The WPI-based inflation rate has remained in the negative territory for the past six months, beginning from April. This persistent trend of deflation is raising concerns in the economic landscape.
Below Consensus Estimates
The latest WPI inflation figure of -0.26% is notably below the consensus estimate, defying economists’ predictions, who anticipated a rise to 0.7% in the previous month.
Comparison with Retail Inflation
Contrasting Trends in Retail and Wholesale Inflation
The WPI data release comes shortly after the National Statistical Office (NSO) reported a contrasting trend in headline retail inflation. Retail inflation experienced a significant drop to a three-month low of 5.02% in September, decreasing by a substantial 242 basis points compared to July’s 15-month high of 7.44%. Meanwhile, during the same period, WPI inflation has risen by 97 basis points.
The recent data on India’s wholesale inflation presents a unique economic scenario where deflation continues to be a concern, contrary to the trend in retail inflation, which is experiencing a decline. These divergent trends in inflation warrant careful observation in the coming months.
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