Wholesale inflation remained in the negative territory for the sixth straight month in September at (-) 0.26 per cent on easing prices of food items, especially vegetables.
The wholesale price index (WPI)-based inflation rate has been in the negative since April and was (-)0.52 per cent in August. In September last year, it was 10.55 per cent.
Experts said the continued deflation in WPI in year-on-year terms was mostly due to faster decline in food prices.
Inflation in food articles eased to 3.35 per cent in September, after remaining in double digits in the previous two months. It was 10.60 per cent in August.
In vegetables, inflation was (-)15 per cent, as against 48.39 per cent in August. In potato, it was (-)25.24 per cent in September, as against (-)24.02 per cent in the previous month.
However, some hardening in inflation was seen in food items like pulses, onion, milk and fruits during September.
Inflation in pulses was 17.69 per cent, while in onion it was at a high of 55.05 per cent during the month.
Fuel and power basket inflation was at (-)3.35 per cent in September, against (-)6.03 per cent in August.
In manufactured products, inflation rate was (-)1.34 per cent, as against (-)2.37 per cent in August.
"Deflation in September 2023 is primarily due to fall in prices of chemical & chemical products, mineral oils, textiles, basic metals and food products as compared to the corresponding month of the previous year," the commerce and industry ministry said on Monday.
Barclays MD & Head of EM Asia Economics Rahul Bajoria said the easing momentum in core inflation and decline in vegetable prices are driving the moderation in retail inflation. But the sequential rise in the WPI for manufactured products bears watching, if producers pass on higher costs into retail prices.
"As of now, firm surveys indicate the pace of increase in selling prices is lower than that in input prices (as seen in PMIs for manufacturing and services, and RBI's industrial outlook survey). We expect RBI to remain on a prolonged pause, as it monitors uncertainty on the commodity front, both in domestic non-perishable food prices and international energy prices," Bajoria said.
Data released last week showed that the annual retail or consumer price inflation was at 5.02 per cent in September, a 3-month low level.
Earlier this month, RBI projected the CPI inflation to be at 5.4 per cent for 2023-24. The central bank kept key policy interest rate on hold in the fourth consecutive meeting for deciding monetary policy as it targets to keep inflation within the target band of 2-6 per cent.
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