India WPI Inflation Drops to 0.2% in February

In February, India's Wholesale Price Index (WPI)-based inflation fell to a four-month low of 0.20%, down from 0.27% in January, as reported by the Ministry of Commerce and Industry. The WPI measures the average change in prices of goods at the wholesale level and serves as a key economic indicator. This deceleration in wholesale inflation comes amid a slight uptick in food inflation to 6.95% from 6.85% in January, with a notable increase in vegetable prices to 19.78%. Prices of pulses also saw a rise to 18.48%.

The reduction in WPI inflation was partly driven by a contraction in prices for manufactured products, which fell by 1.27%, and fuel and power costs, which declined by 1.59% from the previous year. In contrast, prices of primary articles rose to 4.49% from 3.84% in the preceding month. Despite these movements, retail inflation experienced a marginal ease to 5.09% in February from 5.10% in January.

In response to inflationary pressures, the Reserve Bank of India has kept the repo rate steady at 6.50%, a decision maintained through six consecutive policy meetings. The central bank has projected an inflation rate of 5.4% for the fiscal year 2024. This policy stance reflects the balancing act between managing inflation and supporting economic growth.