According to a recent report by Union Bank of India (UBI), India’s wholesale price index (WPI) inflation is expected to have declined to 2% in February 2023, down from 2.3% in January. This moderation in WPI inflation is largely attributed to a sharp decrease in vegetable prices, which dropped by 12% month-on-month, and a seasonal decline in food prices. Edible oil prices experienced a slight increase, while manufactured food prices remained stable, with only modest price rises in key inputs like sugar and edible oil.
Another key factor contributing to the ease in WPI inflation is the decline in fuel prices, which is expected to remain in negative territory in February. This is due to reduced global oil demand, driven by economic concerns under the second term of US President Donald Trump. The core WPI, which excludes food and fuel, also showed signs of moderation in February, with lower global energy prices contributing to the decline. However, a surge in metal prices limited the extent of the decline.
Looking ahead, UBI expects WPI inflation to continue its downward trend, supported by softening global fuel and commodity prices, as well as seasonal declines in food prices. However, the report advises caution, as ongoing trade wars and disruptions in global supply chains could influence future price trends, which will be closely monitored in the coming months. Overall, this report provides a positive outlook on India’s WPI inflation, with a reduction in prices expected across various sectors.