Wholesale Inflation Cools To –0.32% In November As Deflationary Pressures Ease

India’s wholesale inflation inched up to –0.32 per cent in November from –1.21 per cent in October, signalling a gradual easing of deflationary pressures even as much of the commodity basket continued

to remain weak.

The uptick marks a recovery from October’s 12-month low in the Wholesale Price Index (WPI) and suggests that the sharp phase of wholesale deflation may be behind the economy.

The improvement was largely driven by a slower pace of decline in primary articles, especially food items, after months of steep price corrections. Although wholesale prices stayed in negative territory, November’s reading points to a stabilisation trend taking hold.

Food deflation persists but moderates

Food prices continued to exert the biggest drag on wholesale inflation, though the extent of the decline softened. The food index remained in contraction, but the rate of fall narrowed as vegetable prices stabilised following earlier sharp drops.

Vegetable prices were still more than 20 percent lower year-on-year, a notable improvement from October’s nearly 35 percent plunge. Onion and potato prices remained sharply lower compared with last year, reflecting ample supplies and favourable base effects.

Cereals, which had supported inflation earlier in the year, slipped into negative territory in November. Wheat prices, elevated through much of the first half, also turned marginally negative. Pulses stayed deeply deflationary, extending a trend seen since early summer amid improved availability and lower procurement pressures.

Non-food articles provide some relief

Non-food primary articles offered partial support to the index. Oilseeds prices rose sharply during the month on supply constraints and firm global cues, pushing inflation in the segment close to double digits. Minerals inflation also strengthened, reflecting price pressures in select construction- and industry-linked inputs.

Fuel and manufacturing remain subdued

Fuel and power inflation stayed negative for another month, though the contraction moderated. Crude petroleum and natural gas prices continued to decline year-on-year, tracking global trends, while petrol and diesel also remained cheaper than a year ago.

Inflation in manufactured products, which carry the highest weight in the WPI, eased marginally. Price pressures in manufactured food products cooled sharply, slipping below 1 percent after remaining in high single digits earlier in the year. Edible oils also saw a sharp deceleration after strong gains in the first quarter, while core manufacturing segments such as chemicals, pharmaceuticals, textiles and basic metals showed only modest increases or mild deflation.

Benign inflation outlook

With retail inflation also staying unusually low — below 2 percent in recent months — the easing of wholesale deflation reinforces expectations that price pressures remain well contained, giving policymakers room to stay accommodative despite ongoing global uncertainties.