The WPI inflation eased to 1.9% in November from 2.4% in October. The moderation in the WPI inflation was primarily on the account of a decline in food inflation. The arrival of fresh harvests has led to a seasonal correction in food prices. The outlook for agriculture remains positive, with good Kharif production. Prospects for Rabi sowing remain conducive with healthy reservoir levels and good soil moisture from prolonged monsoons. Meanwhile, inflation in manufactured goods remained subdued in November, rising slightly to 2% due to an unfavourable base effect from the previous year. Deflation in the fuel and power sector persisted, continuing the trend observed over the past four months.
Subdued global commodity prices amid concerns over global demand should keep WPI inflation at a comfortable level. In November, the Bloomberg commodity price index declined by 4.7% YoY, and Brent crude prices fell by 9.4% YoY. However, it is crucial to monitor geopolitical developments closely, as these could significantly influence global commodity markets and supply chains. We expect the WPI inflation to remain largely benign over the next couple of averaging 2.3% in Q3 FY25. For FY25, the WPI inflation is projected to average around 2.5%.
