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WPI Inflation Forecast: Why Analysts See Range-Bound Trend Amid Global Factors

India's wholesale price inflation has turned negative for the first time in months. Analysts believe this trend will continue in the near term due to favorable global conditions. The comfortable food grain stocks and healthy harvest are contributing to stable prices. However, experts warn that reopening economies could push commodity prices upward again.

Key Points: WPI Inflation to Remain Range-Bound Analysts Forecast

  • WPI entered deflation territory at -1.21% in October from 0.1% in September
  • Food articles and fuel prices drove the significant decline in wholesale inflation
  • Core WPI inflation increased to 1.5% reflecting higher metal and aluminium prices
  • Bank of Baroda warns US government reopening could push up global commodity prices
2 min read

WPI inflation to remain range-bound in near term: Analysts

India's WPI enters deflation at -1.21% in October as analysts predict range-bound inflation due to crude prices and healthy harvests. Latest economic outlook.

"We expect WPI inflation to remain range-bound due to benign international crude oil prices, comfortable buffer stocks of food-grains and healthy kharif harvest - Dr Ranjeet Mehta, PHDCCI"

New Delhi, Nov 14

After India's WPI data for October showed deflation, industry bodies on Friday forecast WPI inflation to remain range-bound mainly due to benign international crude oil prices.

"We expect WPI inflation to remain range-bound due to benign international crude oil prices, comfortable buffer stocks of food-grains and healthy kharif harvest," said Dr Ranjeet Mehta, CEO & Secretary General, PHD Chamber of Commerce and Industry (PHDCCI).

State-owned Bank of Baroda forecasted that international commodity prices and oil prices may see some inching up if there is a revival in demand seen following the re-opening of the US government after a 43-day-long shutdown.

Higher than expected surplus in global supplies may also exert downward pressure on oil prices going forward, the bank said, adding that it may exert upward pressure on fuel inflation in the coming months.

The Wholesale Price Inflation (WPI) fell into deflation territory at (-) 1 .21 per cent in October, driven by a drop in prices of food, fuel and manufactured items, government data showed on Friday.

WPI-based inflation was 0.1 per cent in September and 2.8 per cent in October 2024.

The drop was primarily due to a decrease in prices of food articles, crude petroleum and natural gas, electricity, mineral oils, and the manufacture of basic metals, among others, PHDCCI President Rajeev Juneja said.

Core WPI inflation — excluding food, fuel and power — inched up to 1.5 per cent from 0.3 per cent a year earlier, reflecting higher basic metal and aluminium prices even as items such as computers, motor vehicles and food and beverages softened, possibly after GST rate cuts.

"Core inflation also inched higher to 1.5 per cent in October from 0.3 per cent in the previous year. Within food, vegetables, fruits, and spices helped drag the index down, while protein (eggs, meat and fish) and milk inflation increased," the bank noted.

- IANS

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Reader Comments

R
Rohit P
While WPI deflation is positive, I'm concerned about core inflation inching up. Basic metals and aluminum prices affecting manufacturing costs could impact final product prices eventually.
A
Arjun K
Healthy kharif harvest and comfortable food buffer stocks are definitely helping. This is good news for our agricultural economy. Let's hope rabi season is equally good! 🌾
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Sarah B
The US government reopening after 43 days could really impact global oil prices. India being a major importer needs to watch this closely. Strategic planning is crucial here.
V
Vikram M
While analysts are optimistic, I feel they're downplaying the protein inflation. Milk and egg prices are still pinching household budgets. WPI data doesn't always reflect ground reality for common people.
M
Michael C
Interesting to see how GST rate cuts are helping soften prices for computers and motor vehicles. Policy interventions seem to be working in some sectors at least.

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