Producers’ inflation based on Wholesale Price Index (WPI) eased to 34-month low last month. According to the data released by the Ministry of Commerce and Industry on Monday, the wholesale price index (WPI) turned negative at (-) 0.92 per cent for the month of April 2023 against 1.34 per cent in March.

WPI was in negative zone last in July 2020.

“Decline in the rate of inflation in April 2023 is primarily due to fall in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical and chemical products, rubber and plastic products and paper and paper products,” the ministry said.

Prices of vegetables, potato, onion, fruits and cereals dropped last month.

Also read: India’s falling wholesale prices add room to spur growth

Though softening wholesale prices are likely to benefit consumers, this print may not augur well for the producers, especially farmers as their price realisation will get affected.

Last Friday, the government said that retail inflation based on consumer price index (CPI) dropped to 18 month-low of 4.7 per cent in April. In view of the drop in both the inflation indices, RBI’s Monetary Policy Committee is likely to opt for one more pause in its next bi-monthly review meeting in June. This means, interest rates on loans are unlikely to rise further.

Manish Chowdhury, Head of Research with Stoxbox, said, “We believe this large decline in WPI would not translate immediately into the consumer price inflation as the former is more at the manufacturers level while the latter is related to finished products.”

From the monetary policy standpoint, there is not much to read into today’s data as RBI had already paused the rate hikes, he added.

“A rate cut for us this year looks a little premature, given our expectations of a rangebound inflation going forward and persistent global uncertainties,” he said.

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