India’s WPI Inflation Climbs to 0.26 Percent in November 2023

India's WPI Inflation Climbs to 0.26 Percent in November 2023

VoM News Desk | December 14, 2023 | 07:51 PM IST | Breaking News | Follow on Google News

India’s WPI Inflation Climbs to 0.26 Percent in November 2023

India’s WPI Inflation Climbs to 0.26 Percent in November 2023

India’s Wholesale Price Index (WPI) rebounded to 0.26% in November 2023, marking a pivotal exit from a prolonged seven-month deflationary streak. The surge, the most robust in eight months, primarily stemmed from soaring food prices, pushing the country’s wholesale inflation into positive territory.

Food Prices Drive the Surge
The upswing in WPI was led by a significant 1.9% rise in the food index, predominantly driven by soaring vegetable prices. Notably, onion prices saw an extraordinary spike of 41.3%, while other essential food items such as fruits, wheat, and pulses also witnessed notable increases, contributing to the overall inflationary momentum. The vegetable price index surged by 16.5% month-on-month, intensifying the inflationary pressure.

Stability in Manufactured Products
In contrast, prices of manufactured goods experienced a marginal 0.1% uptick month-on-month, showcasing relative stability. This was attributed to the persistent weakness in critical raw material costs, contributing to a balance in manufactured product prices amid the surge in food prices. This equilibrium signifies a noteworthy shift in India’s inflation dynamics.

Potential Impact on Nominal GDP Growth
Despite the recent upturn in WPI, the average inflation for the first eight months of the fiscal year remained negative at -1.33%. Economists anticipate a continuous elevation in wholesale inflation in the forthcoming months, with an estimated average of approximately 1% for the fiscal year.

This inflationary trajectory might potentially influence India’s nominal GDP growth, considering the 2023-24 Budget projected a 10.5% growth rate, which was not entirely met in the initial half of the fiscal year, recording an 8.6% growth rate. Chief Economic Advisor V Anantha Nageswaran suggests that India could be underestimating its GDP growth due to exceptionally high tax buoyancy.

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