The inflation based on the Wholesale Price Index (WPI) came at 3.85% for February 2023 (over February 2022), the lowest in 25 months and better than the 4.73% recorded in January 2023.
The percentage figure of wholesale inflation for February was better than what the analysts forecasted. A Bloomberg poll of economists was looking for a 4% figure.
The inflation figure cooled down on the back of a decrease in commodity prices– crude petroleum & natural gas, non-food articles, food products, minerals, computers, electronic & optical products, chemicals & chemical products, electrical equipment, and motor vehicles, trailers & semi-trailers.
The latest WPI data, released by the ministry of commerce and industry on March 14, shows that for six consecutive months, there has been a drop in the overall WPI-based inflation.
On an on-year comparison, WPI growth in February 2022 stood at 13.4%.
Noticeably, there has been a drop in inflationary rates month-on-month across three broad major heads– Primary articles, fuel & power, and manufactured products.
When compared on-month wise, WPI inflation dropped 0.88 percent. The price hike in the basket of the primary article was reduced by 0.6 percent, while the fuel and power category saw a slash of 0.33 percent in February. Wholesale prices of manufactured products pared 1.05 percent.
Growth in wholesale prices of manufactured products carrying 64.23 weight came down to 1.94% from 2.9%, while that of primary articles carrying 23% WPI weight decreased to 3.28% from 3.88%.
The fuel and power group saw a dip in raising rates to 14.82% in February from 15.15% in January.
The inflation based on WPI Food Index, including ‘Food Articles’ from the Primary Articles group and ‘Food Product’ from the Manufactured Products group, have decreased from 2.95% in January to 2.76% in February 2023.
Noticeably, the inflation in sub-group food articles rose from 2.38% in January to 3.81% in February 2023. Some items in the Food article basket that got expensive were cereal, fruits, pulses, and milk.
The rate of cereals rose by 13.95%, whereas wheat got expensive by 18.5%. Inflation in milk rose to a 102-month high of 10.3% in February.
Retail inflation in February was 6.44% due to cereals and milk.
Policymakers take into account the figures of retail inflation for better understanding.
India’s retail inflation remained above the RBI’s tolerance threshold of 6% for the second successive month in February at 6.44%, making a tad dip from 6.52% in January, as per the National Statistical Office.
Inflation faced by urban consumers rose marginally from 6% in January to 6.1% in February, while it relaxed fractionally for rural consumers from 6.85% to 6.72% in February.
Inflation in food remained steady in February, with the Consumer Food Price Index rising 5.95%, just a touch lower than 6% in January.
Among the States, those recording the highest inflation rates remained unchanged from January through February.
Telangana witnessed the highest peak in price rise at 8.56%, followed by Andhra Pradesh (8.01%), Madhya Pradesh (7.65%), Uttar Pradesh (7.12%), and Haryana (6.97%).
With CPI inflation coming above the RBI target, most analysts expect another rate hike in the April meeting of the Monetary Policy Committee of the central bank.