Relief for the common man for the second consecutive month, inflation has reduced by this much

India's wholesale inflation rate turned negative in November, falling 0.32% year-on-year. This decline was primarily due to lower prices of food items, mineral oils, and crude petroleum and natural gas. 

Despite the decline in food inflation, mineral and food prices saw a month-on-month increase. Data shows that inflation fell from -1.21% in October to -0.32%, a slight increase. 

However, overall inflation remains low. Wholesale inflation remains below zero, marking the second consecutive month of negative inflation.

This rise marks a rebound in the Wholesale Price Index (WPI) from a 12-month low in October. After several months of sharp price declines, the WPI rose as the pace of decline in prices of primary articles, especially food items, slowed. 

Although wholesale prices remain in negative territory, November data suggests the worst of inflation may be over. Food items are still exerting pressure, but the decline has moderated. 

Food prices exerted the greatest downward pressure on wholesale inflation, although the intensity of the decline has moderated. The food index continued to decline, but the rate of decline slowed as vegetable prices stabilized after an earlier sharp decline.

Vegetable prices were still more than 20 percent lower than the same period last year, but this was a significant improvement from October, when prices fell by nearly 35 percent. 

Onion and potato prices remained significantly lower than a year ago, reflecting abundant supply and a favorable base effect. Cereals, which had supported inflation earlier in the year, slipped into negative territory in November. 

Wheat prices, which had remained high throughout the first half of the year, also turned slightly negative. Pulses remained sharply lower, continuing a trend seen since the beginning of summer, driven by improved availability and reduced buying pressure.

Some support came from non-food articles.

Non-food primary articles partially offset the uptick. Oilseed prices rose in November due to supply-side constraints and strong global cues, pushing inflation in this segment to near double digits. Minerals inflation also strengthened, reflecting price pressures in select construction- and industry-related inputs.

Fuel, manufacturing remain sluggish

Fuel and electricity inflation remained negative for another month, although the pace of decline slowed. Crude petroleum and natural gas prices fell year-on-year in line with global oil trends, while petrol and diesel remained cheaper than a year ago.

Inflation in manufactured products, which have the highest weighting in the WPI, eased slightly. Price pressures in manufactured food products eased sharply, falling below 1 percent after remaining in high single digits at the beginning of the year. 

Edible oils also saw a significant decline in prices after a strong gain in the first quarter. Key manufacturing categories such as chemicals, pharmaceuticals, textiles, and basic metals saw only modest increases or slight declines, suggesting limited cost-push pressures.

Price outlook remains positive

Retail inflation also remains unusually low – below 2 percent in recent months – and the decline in wholesale inflation strengthens expectations that overall price pressures are under control, giving policymakers room to maintain an accommodative stance despite the global situation remaining uncertain.