India's March wholesale inflation at record 29-month low of 1.34%

India's wholesale inflation eased to a 29-month low of 1.34% in March 2023 as prices across commodities and food segments declined steeply, showing disinflationary trends, official data released on Monday showed.

The wholesale price index rose at its slowest level since October 2020, but the gap between consumer or retail prices continues to be high. Wholesale prices had come in at 3.85% in February.

Retail prices cooled to 5.66% in March, the lowest in 15 months, against a 6.44% rise in February, signaling relief to the Reserve Bank of India.

Data released on Monday showed inflation in manufactured products — which has the largest weight in the wholesale price index— fell by 0.77%, against a 3.85% rise in February. Price growth in so-called primary articles stood at 2.4% compared to an increase of 3.28% in the previous month.

Vegetable inflation shrunk by 2.22% but at a lower pace, compared with a steep fall of 21.53% in the previous month. Inflation in the non-food items category dipped by 4.63%.

To cool prices, the Reserve Bank of India had raised the key lending rate by 250 basis points since the beginning of the cycle in May 2022. The central bank then paused a rate hike this month. A basis point is one-hundredth of a percentage point.

Central banks typically raise the repo rate – the interest rate at which commercial banks borrow money by selling their securities to the Reserve Bank – to shrink the money supply in the economy as a means to control inflation.

"Our job is not yet finished and war against inflation has to continue until a durable decline in inflation closer to target is seen," Reserve Bank of India governor Shaktikanta Das said on 6 April.