According to data released by the commerce ministry on December 14, wholesale inflation in India increased to 0.26 percent in November, breaking out of the deflationary zone for the first time since March 2023. In October 2023, the Wholesale Price Index (WPI) inflation rate was -0.52 percent; in November 2022, it was 6.12 percent.

The most recent wholesale inflation figure, at 0.26 percent, is the highest in eight months. The WPI data was released two days after the Ministry of Statistics reported that headline retail inflation increased to 5.55 percent in November, a three-month high. However, it was still 189 basis points below the 15-month high of 7.44 percent in July. Over the same time frame, wholesale inflation has increased by 149 basis points.

The government ascribed November’s positive inflation rate to higher costs for food items, minerals, computers, machinery and equipment, electronics and optical goods, automobiles, other transportation equipment, and other manufacturing, among other things.

The Wholesale Price Index, also known as the WPI, assesses how much the prices of goods wholesale businesses trade and sell in bulk with other companies have changed. WPI tracks factory gate prices before retail prices, in contrast to the Consumer Price Index, or CPI, which tracks consumer purchase costs of goods and services.

In November, the core inflation rate was -0.4%, down from -1% in the previous month.
In comparison to October 2023, the prices of minerals (-0.41%), natural gas and crude oil (-4.79%), and non-food items (-0.24%) decreased in November 2023. In November 2023, the price of food items grew by 2.62% over the previous month.

The average WPI inflation for the first eight months of 2023–24 is -1.33 percent, which is harmful even though it went above zero in November. Although further increases are possible in the upcoming months, most economists predict it will average approximately 1 percent for the entire year. The nominal GDP growth of the nation, which the 2023–24 Budget projected would be 10.5 percent while estimating tax revenue and other expenses, may be jeopardized by this.

According to the most recent data, nominal GDP growth was only 8.6 percent in the first half of 2023–2024.

However, Chief Economic Advisor V Anantha Nageswaran has raised the possibility that India’s GDP growth rate is being underestimated.

“It is a theoretical possibility that when you have a tax buoyancy which is as high as 1.9 or close to 2, which is historically unprecedented, then it is quite possible that we are not measuring the economy’s underlying momentum and activity and dynamism as we should be,” Nageswaran had stated on November 30.