India’s wholesale price index (WPI)-based inflation rose to a four-month high of 2.36% in October, driven mainly by a surge in key food prices and an unfavorable base effect, according to data released by the commerce ministry on Thursday.

In comparison, WPI inflation was (—)0.26% in October 2023 and 1.84% in September. Wholesale food inflation surged to 11.59% in October, marking the highest level in 28 months, primarily due to sharp price increases in vegetables, oilseeds, and cereals.

Aditi Nayar, Chief Economist at ICRA, noted that food inflation alone contributed to a 63 basis point rise in the headline WPI between September and October 2024.

The inflation rate for ‘manufactured products’ climbed to 1.5% in October, the highest in three months, while the ‘fuel & power’ segment saw a decline to a 14-month low of (-)5.79%. Prices of manufactured products increased for the second consecutive month, reflecting higher wholesale prices for manufactured foods, textiles, basic metals, and machinery, which may lead to a further pass-through to retail prices and push core CPI inflation higher, analysts said.

Barclays noted that while the Monetary Policy Committee (MPC) had highlighted the rise in international metal prices in its October meeting, the trend appears to be reversing, with prices of most metals and crude oil declining in November, which could moderate pressure on manufactured products’ WPI.

Data from Tuesday showed core CPI inflation in October reached a 10-month high of 3.7%, with projections indicating further increases, potentially reaching 4% by January-February.

Among the 21 categories within manufactured (non-food) products, 17 saw positive year-over-year inflation, with the highest rates observed in ‘other manufacturing’ (+15.6% YoY), beverages (+2.0% YoY), and wearing apparel (+1.9% YoY). The categories with the lowest inflation were ‘other non-metallic mineral products’ (-3.4% YoY), ‘basic metals’ (-3.1% YoY), and ‘metal products’ (-2.2% YoY).

Also read | Cryptocurrency Market Reaches All-Time High of $3.2 Trillion

ICICI Bank highlighted that global base metals prices have risen by 9.2% YoY recently and expect this trend to be reflected in future wholesale inflation prints. “Given recent increases in global energy and commodity prices, there is potential for higher WPI inflation in the short term,” the bank stated.

Economists emphasized the need for careful monitoring of evolving geopolitical conditions, but with improved sowing compared to last year, kharif crop arrivals are expected to be strong. “Against this backdrop, we anticipate WPI easing in Q4, in line with CPI, provided there are no new oil or food shocks. Any rate action by the RBI is likely to be warranted only by Q4FY25,” stated Jahnavi Prabhakar, an economist at Bank of Baroda.

For more such latest updates, click here.