India's March Wholesale Inflation Highest In Three Months As Potato, Onion Prices Boil

India's wholesale prices continued to see an uptick, accelerating to a three-month high in March.

The Wholesale Price Index rose by 0.53% in March, as compared with 0.2% during February, according to data released by the Ministry of Commerce and Industry on Monday.

WPI inflation was in positive territory for the fifth consecutive month. While both fuel and power and manufactured product categories continued to see deflation, an uptick in food price inflation led to a higher overall print, said Rajani Sinha, chief economist at CareEdge Ratings.

It is noteworthy that wholesale onion prices shot up 56.9% in March versus 29.22% in the previous month. Similarly, potato prices were up 52.9% versus a 15.34% rise in February.

• Inflation in manufactured products—the largest component of the index—contracted 0.85%, as compared with a narrowing of 1.27% in February.

• Primary-article inflation was 4.51%, as compared with 4.49%.

• Inflation in food articles rose 6.88%, as against 6.95%.

• Vegetable inflation rose 19.5%, as compared with 19.8% in the preceding month.

• Inflation in non-food articles contracted 4.13%, after narrowing 6.3% in the previous month.

• Fuel and power inflation declined by 0.77%, as compared with a fall of 1.6% a month ago.

With the fading of a supportive base, it is anticipated that the WPI inflation will edge up in the upcoming months, said Sinha. The recent increase in global commodity prices, particularly driven by higher Brent crude prices and a rise in industrial metal prices, is expected to add to upward pressures on WPI, she said.

However, it's worth noting that expectations of a normal monsoon with waning El Nino conditions and a recovery in rabi sowing paint a positive outlook for agricultural production and, consequently, food inflation. This is anticipated to cushion the WPI prints to a certain extent. "Nonetheless, geopolitical tensions in the Middle East remain significant variables to monitor closely. We expect WPI inflation to average around 3% in FY25.”