Perspective on the WPI Data by Rajani Sinha, Chief Economist, CareEdge Ratings
Below the Perspective on the WPI Data by Rajani Sinha, Chief Economist, CareEdge Ratings
“Wholesale prices entered deflation in October, declining by 1.2%. Both primary goods and the fuel and power segments remained in deflation, while inflation in manufactured goods moderated. A sharp decline in food prices, supported by this year’s good monsoon, further deepened deflation in the primary goods category. Meanwhile, lower global energy prices kept the fuel and power segment in deflationary zone, as concerns about global growth, rising policy uncertainties, and OPEC’s decision to increase output continued to weigh on energy markets. Impact of tax cuts and favourable base effect further supported a deflation in the wholesale prices.
Overall, we expect food inflation to stay at moderate levels on the back of healthy agricultural activity and a favourable base. Furthermore, adequate reservoir levels, and strong kharif sowing bode well for food price stability. On the external front, global commodity prices are broadly expected to remain benign given the weak global growth prospects, overcapacity in China and OPEC’s decision to raise crude oil output. For FY26, we expect WPI to remain marginally in deflation at 0.1%.%”.
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