Feb WPI eases to 0.2% as prices of manufactured goods decline
NEW DELHI: Inflation, as measured by the Wholesale Price (WPI) Index, eased to 0.2% in February 2024 from its January print of 0.3% on the continued contraction in prices of manufacturing and fuel and power sub-indices, according to data from the ministry of commerce and industry released on Thursday. The numbers were in line with Bloomberg estimates for February 2024.
The wholesale price index increased for the fourth consecutive month albeit at the slowest pace since November 2023. Unlike the previous two months of sequential deflation in wholesale prices, the WPI was up 0.07% in February over the previous month.
A large part of the slowdown was due to 1.3% deflation in the manufactured goods category, which constitutes about 64% of the WPI basket. The sub-index has stayed in the deflation zone since March 2023. Food prices however stayed elevated, increasing at 4.1% in February 2024.
The January print for the food index was 3.8% slower than the December 2023 print of 5.4%.
Although food prices softened in the past three months, there was an increase in February 2024. To be sure, the sub-index was up by 0.17% in February 2024 on a month-on-month basis after two consecutive months of sequential contraction. Barring the fruits, and eggs meat and fish, the prices of all primary food articles increased at a faster rate than January 2024 on a year – on year basis. Potato prices were higher by 15.3% after contracting for five months straight.
Onion prices, increased at 29.2% in February To be sure, onion price inflation was much slower than the November 2023 print of 109%.
Vegetable prices on a whole increased at a faster pace of 19.8% up 0.7 percentage points from the January print.
Paddy price increased at a faster rate of 10.25% in February after a slight moderation to 9.6% in the previous month. Inflation for pulses grew at 18.5% in the reporting month from 16.1% in January 2024. “The easing in food prices has now faded, thus, the trajectory of cereal prices needs to be watched for signs of persistence” said Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics Research at Barclays in a research note.