India's Nov WPI inflation at 21-month low as food, commodity prices ease

Summary

• Nov WPI inflation 5.85% vs 8.39% in Oct
• Nov WPI Food index 2.17% vs 6.48% in Oct
• Economist expect WPI at low single digit in coming months

India's annual wholesale price-based inflation rate (WPI) INWPI=ECI eased to its lowest in 21 months, signalling that price pressure in Asia's third-largest economy is beginning to cool and policymakers might shift their focus to growth.

Food, energy and prices of manufactured products cooled down, hinting that a spike in input costs for companies due to the Ukraine conflict is now easing.

The WPI for November was 5.85% year-on-year, government data showed on Wednesday, lower than a Reuters analysts' average forecast of 6.50% and 8.39% recorded in the previous month.

The latest print was lowest since February 2021, when WPI rate touched 4.83%.

The WPI rate on manufactured products was 3.59% from 4.42% in the previous month, food index inflation eased to 2.17% from 6.48% and energy cooled to 17.35% from 23.17%.

"The wholesale price inflation has come well below expectations," ICRA economist Aditi Nayar said.

A decline in vegetable prices have also helped in compressing the overall WPI inflation, she said, adding that the WPI is likely to further decline to low-single digit in the next quarter on continuous falling commodity prices.

Earlier this week, the country's annual retail inflationINCPIY=ECI eased below its central bank's upper tolerance level for the first time this year in November. While India's annual industrial output contracted 4% in October, its weakest performance in 26 months.