Wholesale price Index- based inflation rate fell more than expected to (-) 0.52 per cent in October, marking the seventh consecutive month in the negative territory, data released by the Ministry of Commerce and Industry on Tuesday showed. Continued deflation in manufactured products, and fuel and power categories kept the WPI inflation lower even though sequentially there was some uptick in food prices led by cereals, vegetables and protein items. The inflation rate has been in the negative zone since April and was at (-) 0.26 per cent in September 2023 and at 8.67 per cent in October last year.
Wholesale inflation, which reflects prices at producers’ end, remains below retail inflation. The latest retail inflation data for October showed Consumer Price Index-based inflation eased to a four-month low of 4.87 per cent in October. A negative wholesale inflation though could result in a lower nominal Gross Domestic Product (GDP), with some estimates pegging it to not be over 9 per cent due to slower GDP deflator that has a significant weight of WPI. The lower nominal GDP growth could result in fiscal slippage risk, with the government’s fiscal deficit estimates calculated as a percentage of the GDP.
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