India’s wholesale price inflation (WPI) fell to a two-year low of 3.85% in February from 4.73% in January, with inflation slowing to just under 2% in manufactured goods inflation from 3% in January, and primary goods, food and fuel and electricity inflation , which is showing milder downturns in inflation month-on-month. Base effects also played a role, with wholesale prices up 13.43% in February 2022.
Fuel and electricity inflation fell slightly from 15.15% in January to a 14.8% price increase this February, compared to 30.8% in the same month of 2022. Inflation, as measured by the wholesale food index, fell from 2 .95% in January to 2.76% in February. The pace of decline was slightly faster than consumer food prices, which moved from 6% to 5.95% over the same period.
Also read | Retail inflation remains little changed at 6.44% in February
Onion prices continued to fall for the 18th consecutive month year-on-year since September 2021, with February 2023 recording the sharpest drop in wholesale prices of 40.14% amid this deflationary streak.
Vegetable inflation contracted for the fourth straight month, with prices falling 21.5% from February 2022. Potato prices, which had risen sharply since February 2022 with 11 straight months of double-digit inflation, fell 14.3% in February 2023.
While retail grain inflation accelerated to nearly 17% in February, wholesale inflation for the critical food item fell to a three-month low of 13.95%. Wheat inflation also fell to a three-month low of 18.54, but paddy inflation accelerated to 8.6%, the highest in at least two years.
Wholesale inflation for fruit (7%) and milk (10.33%) also made new highs recently and was higher than consumer experience of a price hike in February, suggesting there is scope for further price increases in the coming months exists in retail.
In the fuel and power segment, LPG prices fell for the fourth straight month but marked the slowest pace of deflation in the four months at -7.1%. Gasoline price inflation edged down to 15.2% in February from 15.5% in January, while high-speed diesel inflation edged down to 24.6% in February from 28.5% in the previous month.
Textile products saw a third consecutive month of falling prices, with deflation accelerating to 3.5% from 2.1% in January. However, clothing wholesale inflation rose to a three-month high of 3.5%.