India’s Wholesale Prices Continue Negative Streak, Food Prices See Significant Drop

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India’s Wholesale Price Index (WPI) maintained its downward trend, recording a negative reading for the sixth consecutive month in September, standing at -0.26 percent. This protracted period of deflation has taken many by surprise, as expectations were for a 0.7 percent increase.

Notably, the food component of the Wholesale Price Index (WPI) experienced a significant decline, largely attributable to a substantial drop in tomato prices. Tomatoes saw a remarkable 73 percent decrease in September. However, in a contrasting trend, other food items like cereals (1 percent), pulses (6 percent), fruits (5 percent), and milk (0.7 percent) witnessed price hikes, raising concerns among consumers.

While the WPI data reflected a 0.59 percent month-on-month (MoM) decline in September, mirroring the Consumer Price Index (CPI) drop of 1.1 percent, the lingering adverse base effect and price increases in specific categories offset this sequential decrease, underscoring the persisting economic challenges.

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In contrast to the broader trend, the fuel and power group of the WPI experienced an increase of over 2 percent MoM, signaling a rise in energy costs. This surge could potentially trigger cascading effects across various sectors of the economy.

The escalating prices in essential food items and the energy sector present a dual challenge for both the government and the Reserve Bank of India (RBI). The RBI, in particular, faces the delicate task of maintaining economic stability while addressing inflationary pressures in specific sectors, making it a complex balancing act.

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