Costly veggies push wholesale price inflation to 8-month high

Agencies

Wholesale price-based inflation rose to an eight-month high of 0.26 per cent in November, driven by a sharp jump in food prices, especially onion and vegetables.

The WPI inflation was in the negative or deflationary zone for the past seven months since April and was at (-)0.52 per cent in October.

The last positive WPI inflation was recorded in March at 1.41 per cent.

“Positive rate of inflation in November 2023 is primarily due to increase in prices of food articles, minerals, machinery & equipment, computer, electronics & optical products, motor vehicles, other transport equipment and other manufacturing etc,” the commerce and industry ministry said in a statement.

Food inflation spiked to 8.18 per cent in November, from 2.53 per cent in October.

Inflation in onion zoomed 101.24 per cent in November, from 62.60 per cent in the previous month.

The government last week banned exports of this kitchen staple till March next year in a bid to increase domestic availability and contain prices, which skyrocketed to Rs 80/kg in the retail market. It expects prices to cool to Rs 40/kg by January.

Inflation in vegetables was 10.44 per cent, as against (-)21.04 per cent in October.

In paddy and fruits, inflation was 10.44 per cent and 8.37 per cent respectively. Inflation in potato remained low at (-)27.22 per cent in November.

During the month, inflation in manufactured products stood at (-)0.64 per cent, fuel and power (-)4.61 per cent and non-food articles (-)3.20 per cent.

Barclays Research said the magnitude of increase in wholesale food prices was more than in retail food prices, indicating wholesalers did not pass through the entire price rise to consumers, which may be reflected in elevated retail food prices in December, unless supply (particularly of vegetables) increases.

The RBI in its monetary policy review last week had said that there would be an uptick in the inflation data for November and December due to pressure on food prices.

“Going ahead, the inflation outlook would be considerably influenced by uncertain food prices.

“High-frequency food price indicators point to an increase in prices of key vegetables, which may push CPI inflation higher in the near term,” RBI Governor Shaktikanta Das had said.

Retail or consumer price-based inflation rose at its fastest pace in three months at 5.55 per cent in November, driven by a spike in food prices, data released earlier this week showed.

The RBI had projected retail inflation to average 5.4 per cent this fiscal.

The Asian Development Bank (ADB) in its December outlook released on Wednesday said India's inflation forecasts for 2023 and 2024 are in line with recent data and are still within expectations.

It forecast retail inflation at 5.5 per cent for this fiscal.