In line with the uptick in retail inflation, wholesale inflation in India too witnessed a sharp spike in October. The annual rate of inflation based on all India Wholesale Price Index (WPI) number is 2.36 per cent (provisional) for the month of October, 2024 (over October 2023). Wholesale inflation continues to remain in the positive territory for a year now. Economists often say a little rise in wholesale inflation is good as it typically incentivizes goods manufacturers to produce more.
For food index, which has 24.38 per cent weightage, the rate of wholesale inflation was at 11.59 per cent in October, against 9.47 per cent in September. In August, it was 3.21 per cent.
The government releases index numbers of wholesale prices on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.
In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative. Notably, the wholesale price index (WPI)--based inflation had been in double digits for 18 months in a row till September 2022.
Meanwhile, India's retail inflation was at 6.21 per cent in October, breaching the Reserve Bank of India's 6 per cent upper tolerance level. High food inflation in October was mainly due to an increase in the inflation of vegetables, fruits, and oils and fats.
Food prices continue to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis. Going forward, all eyes will be on the Kharif harvest season and progress in rabi sowing will also be keenly watched.
The RBI has kept the repo rate elevated at 6.5 per cent to keep inflation contained. The repo rate is the rate of interest at which the RBI lends to other banks.
