India’s wholesale inflation remains steady at 2.38% in February

India’s wholesale inflation rate saw a marginal uptick in February, settling at 2.38%, according to data released by the Ministry of Commerce on Monday. The figure is slightly higher than January’s wholesale inflation, which stood at 2.31%.

A key contributor to the inflation rate was the rise in prices of manufactured food products, food articles, textiles, non-food articles, and other manufacturing categories. However, the Food Index, comprising both primary food articles and manufactured food products, witnessed a decline—from 7.47% in January to 5.94% in February—indicating some relief in food price pressures.

The wholesale price index (WPI)-based inflation has remained in positive territory for over a year now. Analysts often suggest that a moderate increase in wholesale inflation is beneficial, as it encourages manufacturers to boost production to meet demand.

Historically, WPI inflation was in double digits for 18 consecutive months until September 2022. The index briefly dipped into negative territory in April last year, and had also turned negative in July 2020 during the early phase of the COVID-19 pandemic.

India has faced elevated food inflation over the past several months, primarily driven by higher prices of vegetables, fruits, oils, and fats. However, recent data suggest that these pressures have eased.

The Reserve Bank of India (RBI), which had maintained the repo rate at an elevated 6.5% for nearly five years to control inflation, recently reduced the rate by 25 basis points to support growth and consumption. The repo rate is the interest rate at which the RBI lends funds to commercial banks and serves as a crucial tool in managing inflation and liquidity in the economy.

The government publishes WPI inflation data monthly, typically on the 14th or the next working day, based on information gathered from various institutional sources and selected manufacturing units across the country.