India’s annual Wholesale Price Index (WPI)-based inflation declined to a 29-month low of 1.34 per cent in March 2023 as input prices continued to moderate, government data showed on Monday. This is the 10th straight month of decline in WPI-based inflation.

The WPI inflation data was 3.85 per cent in February, 4.73 per cent in January 2023, and 14.63 per cent in March 2022.

The food index inflation eased to 2.32 per cent in March from 2.76 per cent in February. For the primary articles segment, the inflation rate cooled to 2.40 per cent in March 2023 versus 3.28 per cent in February.

“Most components of the WPI inflation rate have eased across manufactured, primary, and fuel and power groups. The fall in wholesale inflation is a positive development. On expected lines, the data has been softening for the past few months and falling in sync with retail inflation,” said Dheer Shah, CFO of BDR Pharma.

As we advance, a good monsoon year will help with stable WPI inflation, whereas a spike in crude prices will pose a risk to wholesale and retail inflation. Inflation must be stable and in a range for the central bank to put its interest rate policy on hold and start easing from CY24 onwards,” Shah added.

The WPI measures the price of a representative basket of wholesale goods in India. The index is divided into three groups namely primary articles (22.6 per cent of total weight), fuel and power (13.2 per cent) and manufactured products (64.2 per cent).

The decline in the rate of wholesale inflation in March is primarily contributed by fall in prices of basic metals, food products, textiles, non-food articles, minerals, rubber & plastic products, crude petroleum & natural gas and paper and paper products, the Ministry of Commerce & Industry said in a statement.

Inflation in wheat and pulses was 9.16 per cent and 3.03 per cent, respectively while in vegetables it was (-)2.22 per cent. Inflation in oilseeds was (-)15.05 per cent in March 2023.

Fuel and power basket inflation eased to 8.96 per cent last month from 14.82 per cent in February. In manufactured products, inflation was (-)0.77 per cent as against 1.94 per cent.

The deceleration in WPI comes in line with the easing of March retail inflation.Recently, India’s retail inflation cooled to below the Reserve Bank of India’s upper tolerance level of 6 per cent for the first time in three months, to 5.66 per cent in March supported by a favourable base and easing pent-up demand.