Wholesale Inflation Surges to 4-Month High of 2.36% in October Amid Food Price Escalation

India’s wholesale inflation, measured by the Wholesale Price Index (WPI), climbed to a four-month high of 2.36% in October, marking a significant rise from 1.84% in September. This increase was primarily driven by a steep hike in food prices, particularly in essential vegetables like potatoes and onions, according to data released by the Ministry of Commerce and Industry on Thursday. 

Rising Wholesale Food Inflation Boosts WPI 

The surge in food inflation within the WPI framework was notable, rising to 13.54% in October from 11.53% the previous month. This marks a worrying trend, given the critical role food prices play in the overall inflationary picture. The data follows closely on the heels of Consumer Price Index (CPI) data, which showed retail inflation hitting a 14-month peak of 6.2% in October, also spurred by escalating food costs. 

Key Drivers: Vegetables and Essential Commodities 

Food items, particularly vegetables, recorded steep price hikes, leading to the overall inflationary rise. Potato prices soared by 78.73%, while vegetable prices rose 63.04%, and fruit prices went up by 13.55%. Wheat prices also witnessed a rise of 8.04%. Although onion prices slightly decelerated, they continued to register high inflation at 39.25%. 
Prices of other essential food commodities displayed mixed trends. Cereals increased by 7.91%, paddy by 7.47%, and pulses by 9.74%, although these items saw a slight deceleration compared to prior months. Milk inflation also eased to 3%. 

Manufactured Goods Witness Inflationary Pressures 

The inflation rate for manufactured products, which constitute over 64% of the WPI index, edged up to 1.5% in October from 1% in September. Key contributors to this trend included manufactured food products (up by 7.77%), vegetable oils (20.16%), and beverages (2.13%). 
Within the manufacturing sector, certain categories experienced a deceleration. Tobacco saw inflation of 1.15%, textiles 0.89%, apparel 1.25%, and pharmaceuticals 0.42%. These relatively modest increases helped to balance some of the upward inflationary pressures in manufactured goods. 

Fuel and Power Prices Continue to Decline 

While food and manufactured goods contributed to inflationary pressures, the fuel and power index continued to contract, with prices falling by 5.79% in October. Specifically, high-speed diesel prices dropped by 6.23%, and petrol prices by 7.35%. The price of cooking gas saw a sharp deceleration, rising by only 2.57%. 

Expert Insights: Food Inflation Drives Overall WPI Growth 

Economic analysts highlight that food inflation remains the core driver behind October’s wholesale inflation increase. Paras Jasrai, a senior economic analyst at India Ratings, commented, “The persistent and high increase in food prices, especially vegetables, pushed WPI inflation to a four-month high. The inflation rate for vegetables alone climbed to a 15-month high, which in turn pulled up food inflation to a 28-month high.” 
However, wholesale core inflation, which excludes volatile items like food and fuel, remained relatively low at 0.3%. Jasrai added, “The global economic environment has kept the trajectory of commodity prices range-bound, favoring India by keeping input cost inflation in check despite food inflation pressures.” 

Outlook: Balancing Food Inflation and Economic Stability 

With both wholesale and retail inflation figures showing upward trends, policymakers may face increasing pressure to manage food price inflation, which affects both consumers and overall economic stability. High food inflation, particularly in essential items, is a concern as it can erode purchasing power and contribute to an increase in the cost of living. 
As India navigates these inflationary pressures, both the government and the Reserve Bank of India will need to remain vigilant. With the approaching winter season, which often impacts vegetable supply, the inflationary trend may persist, necessitating close monitoring and potential policy intervention. 
The trajectory of inflation in the coming months will be critical for understanding the broader economic impacts, especially on the manufacturing and agriculture sectors, which are heavily influenced by input costs.