Wholesale inflation in the country eased to 10.6 percent in September from 11.4 percent in August and 11.6 percent in July helped by a weakening fuel inflation, including that of petrol, LPG, and high-speed diesel.
Measured by the Wholesale Price Index (WPI), wholesale inflation in India weakened for the fourth straight month in September, per government data released on October 14. Economists said it was reaching an inflexion point. It had reached record-high levels in May after the pace of inflation rose for five straight months.
The primary reason behind overall inflation has moderated in the past few months is that the rise in fuel prices has been slower and steadier. While fuel inflation has not fallen to 2020 levels, the volatility has gone down. Fuel inflation in September eased to 24.8 percent from August’s 26 percent and July’s 27 percent.
After a decline for 11 straight months, overall fuel prices had risen just 2 percent in February before escalating rapidly. Till May, fuel inflation had nearly doubled for three straight months hitting 37 percent. Spiraling fuel prices and therefore transport costs have led to costs spiking economy-wide. Overall inflation was further pushed up by an 11.4 percent rise in manufacturing prices in September, similar to the rate of inflation in the category in August.”After four months of consecutive moderation, we expect the WPI inflation to rise in October 2021 and remain in double-digits in Q3 FY2022. While a favourable base will moderate the WPI inflation during Q4 FY2022, it is nonetheless likely to average around 10 percent in FY2022,” Aditi Nayar, Chief Economist, ICRA said.