India’s wholesale price index (WPI) recorded a significant drop in April, slipping into negative territory for the first time in nearly three years, according to data released by the Ministry of Commerce & Industry. The WPI stood at -0.92% due to a softening of prices across all segments, particularly in the food sector. The all-commodities index remained unchanged, while food price inflation fell significantly from 2.32% in March to 0.17% in April. The decrease in inflation was broad-based, primarily driven by lower prices of crude, energy, non-food, and food articles.
The WPI-based inflation has been falling steadily, dropping from 3.85% in February to 1.34% in March, and reaching -0.92% in April. Manufactured products’ inflation declined to 2.42%, while primary articles and fuel & power inflation stood at 1.6% and 0.9%, respectively.
With the fall in WPI and the recent sharp decline in the Consumer Price Index (CPI)-based inflation to an 18-month low of 4.70% in April, experts predict a positive impact on retail prices as well. The trend is expected to continue due to consistently falling prices of some key items. The lower CPI print for April indicates that the Reserve Bank of India (RBI) could keep interest rates unchanged in the June policy, depending on the trajectory of prices until then. Economists like Madan Sabnavis from Bank of Baroda believe that the high-base effect and falling commodity prices will keep WPI inflation in check this year.
