Analysts foresee rise in metric in H2

KOLKATA: The Wholesale Price Index (WPI) in India is likely to rise in the second half of the ongoing fiscal and a prolonged deflationary trend could impact growth, experts said on Monday.

Wholesale inflation remained in the negative territory for the sixth straight month in September at (-) 0.26 per cent on easing prices of food items, especially vegetables.

“In September, the WPI exhibited its sixth consecutive month of contraction, with a decline of 0.3 per cent year-on-year (y-o-y), lower than the previous month’s contraction of 0.5 per cent,” CareEdge Chief Economist Rajani Sinha said. “The continued contraction in WPI can be attributed to the deceleration in food prices, as well as the ongoing decline in fuel and manufactured product prices,” Sinha said.

She suggested that while the fading impact of a high base may lead to a “slight increase” in WPI in the second half of the fiscal year, the overall WPI inflation is expected to remain low.

Elevated global crude oil prices and potential risks to kharif harvest due to uneven rainfall also pose upside risks to WPI inflation, Sinha said.

Abhirup Sarkar, an economist and professor at the Indian Institute of Statistics, told PTI that while the decrease in fuel prices is positive news, geopolitical conflicts in Russia and the Middle East could lead to an increase in international oil prices, affecting wholesale price inflation in India.

He said although wholesale food prices have seen a decline, it may take time for this to be reflected in retail prices, as it depends on traders and their ability to pass on the price reduction to consumers.