Wholesale prices based inflation (WPI) dropped to a 40-month low of 0.16% (provisional) in October, government data released on Thursday showed. It was -0.09% in June 2016.
Low weightage of food prices in the (WPI) index has kept the wholesale prices low. Also, subdued prices of non-food articles and dip in prices of the manufactured items have kept the WPI for the October month low.
The food articles that have a weightage of around 15% in the WPI, weigh more than 45% in the CPI. Retail inflation (CPI) surged to a 16-month high of 4.62% in October, according to government data on Wednesday.
October month's WPI is lower than 5.54% recorded in the same month last year. It is also below 0.33% logged in September 2019.
Where the WPI for October (2019) climbed 3.2% for food items, it fell 0.3% for non-food articles, 3.2% for minerals, and 0.7% for crude petroleum and natural gas as compared to the previous month (September 2019).
The inflation rate basis the WPI Food Index rose from 5.98% in September 2019, to 7.65% in October, 2019.
Reacting to the WPI numbers for the October (2019) month, Rahul Gupta, Currency Research Head, Emkay Global Financial Services Ltd said, "WPI surprised the market by shying away from market expectations of 0%, however it continued to slump in Oct to 0.16% from 0.33% in Sep. The deflation in wholesale prices signals that there is still lack of demand in segments like manufacturing, metals, chemical products. While, only the surge in vegetable prices led to a rise in WPI from the market forecast. The continued weakness in WPI along with slowing growth will induce RBI to cut repo rate again in Dec."