Perspective on WPI Data by Ms. Rajani Sinha, Chief Economist, CareEdge
Below the Perspective on WPI Data by Ms. Rajani Sinha, Chief Economist, CareEdge
“The WPI inflation increased slightly to 2.4% in February 2025, up from 2.3% in January. The increase in WPI inflation occurred after three consecutive months of decline. While inflation in primary articles moderated significantly, primarily due to a decline in food prices, this was offset by a rise in inflation within manufactured goods. Additionally, the deflation in the fuel and power category narrowed.
Outlook of food inflation has brightened. Encouraging prospects for the agricultural production, arrival of fresh Rabi harvest and comfortable reservoir levels are positives for food inflation. Food inflation is likely to remain benign in the coming months, however, we need to be cautious of any weather-related disruptions. Although Brent crude oil prices remain comfortable, the rise in industrial metal prices likely contributed to the increase in inflation within manufactured goods. The strong price momentum in certain base metals has driven the growth of industrial metal prices. The Bloomberg Commodity Price Index rose by 4.1% in January and 9.2% in February, reversing the deflationary trend observed over the previous six months.
Going ahead, it is crucial to monitor geopolitical developments and global trade uncertainties closely, as these could significantly influence global commodity markets and supply chains. Recent depreciation of rupee against USD raises the risk of imported inflation. Despite the rise in global commodity prices, these factors are unlikely to pose a significant threat, as economic growth in China remains subdued. We expect the WPI inflation to remain largely benign over the next couple of months averaging 2.3% in Q4 FY25. For FY26, the WPI inflation is projected to average around 3%”.
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