WPI inflation remains benign, likely to normalise by Sept-Oct: Experts

New Delhi, June 14: The inflation in food articles is expected to rationalise by September-October as many of the kharif crops will enter the markets and supplement the existing supply, industry experts said on Friday.

According to figures released by the Commerce Ministry, India's inflation rate based on the Wholesale Price Index (WPI) edged up to 2.61 per cent during May compared to the same month last year.

“Supported by negative inflation in the non-food articles (-3.9 per cent), the WPI inflation remains benign at 2.6 per cent in May 2024,” said Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry. Despite the global headwinds, the WPI inflation trajectory in fuel and power also remained low at 1.3 per cent in May.

However, the WPI inflation in food articles at 9.8 per cent in May as compared with 7.7 per cent last month still poses a challenge. “Going ahead, inflation in the food articles is expected to rationalise on the back of the government strengthening the supply chains and expectation of above normal southwest monsoon,” said Agrawal.

Aditi Nayar, Chief Economist, Head of Research and Outreach at ICRA, said the core WPI (non-food manufacturing WPI) reverted to the inflationary territory in May 2024 after a gap of 14 months. “This alone contributed as much as 57 bps to the 130 bps uptick in the headline print compared to April 2024,” Nayar noted.

A well distributed rainfall would be crucial to support the timely onset of kharif sowing across states, as well as replenish the reservoir levels, which are essential to keep a check on food inflation, said experts.

The WPI inflation has been edging up over the last three months from 0.26 per cent in March to 1.26 per cent in April largely due to the increase in the prices of food items along with an increase in fuel prices.