In April, wholesale inflation decreased for the first time in three years as a result of a decline in world commodity prices, which relieved pressure on factory raw material costs. The drop in wholesale pricing points to a further fall in consumer inflation.
In April, the wholesale price index fell 0.92%. Comparatively, April of last year had an expansion of 15.38%, and March of this year saw an expansion of 1.34%. WPI last fell below zero in July 2020, at the height of the global shutdown intended to stop the coronavirus’s spread.
Retail inflation dropped to an 18-month low in April, according to data released on Friday, comfortably keeping below the Reserve Bank of India’s upper tolerance range for the second consecutive month due to a drop in food costs. Retail From 5.66% in March to 4.7% in April, inflation slowed.
“The drop in global commodity prices has been very beneficial for manufactured goods. As long as there is no momentum for global growth, prices will continue to drift lower. As a result, even oil prices are anticipated to decline, supporting the fuel and power inflation index, according to Bank of Baroda Chief Economist Madan Sabnavis.
In contrast to a growth of 0.77% in March, the inflation rate for manufactured goods decreased by 2.42% in April.
CareEdge Group’s Rajani Sinha, chief economist, predicted that the deflationary trend may last for the ensuing two to three months, with annual WPI inflation averaging between 1% and 2%. An inferior WPI print With a delayed effect on core CPI inflation, retail inflation may serve to reduce overall inflation, Sinha argued.In the meantime, food item inflation decreased to 3.54% in April from 5.48% in March. However, according to experts, the direction of food costs will be determined by the frequency and intensity of monsoon rainstorms.
With a contraction of 1.8% in April from 0.3% in March, core inflation, which excludes volatile components like food and energy costs, also decreased and continued to be in negative zone.In the upcoming monetary policy meeting in June, economists now anticipate RBI to hold policy rates steady.
By maintaining the benchmark policy rate at 6.5% last month, the RBI’s monetary policy committee stopped the cycle of rate increases. RBI increased rates. six times in a row to tame inflation before it decided to pause last month.
