Wholesale Inflation Remains in Negative Zone at –0.32%, Pressure Eases in November

Wholesale Narrows to –0.32% in November, Signalling a Gradual Turn in Price Trends

India’s wholesale inflation showed early signs of stabilisation in November, with the Wholesale Price Index (WPI) rising to –0.32 percent, compared with –1.21 percent in October. While wholesale prices remain in deflationary territory, the latest data suggests that the sharp price correction seen over recent months may be easing.

November’s reading marks a recovery from a 12-month low recorded in October, indicating that the worst phase of wholesale deflation could be behind the economy. A slowdown in the pace of price declines across primary articles—particularly food items—played a central role in lifting the index, even as several commodity segments continued to face weak pricing conditions.

For investors and policymakers, the data offers cautious reassurance that price pressures across the supply chain are stabilising after a prolonged period of softness.

Food Prices Continue to Weigh, but the Decline Moderates

Food articles remained the biggest drag on wholesale inflation in November, though the intensity of deflation eased notably. The food index stayed in contraction, but the rate of decline narrowed as prices of key vegetables showed signs of stabilisation after steep falls earlier in the year.

Vegetable prices were still more than 20 percent lower year-on-year, but this marked a clear improvement from October, when prices had plunged nearly 35 percent. The moderation suggests that excess supply pressures may be easing, supported by seasonal adjustments and base effects.

Onions and potatoes continued to trade sharply lower compared with last year, reflecting ample availability and improved logistics. However, the pace of decline was less severe, contributing to the overall improvement in the WPI print.

Cereals, which had supported inflation earlier in the year, slipped into negative territory in November. Wheat prices, after remaining elevated through much of the first half of the year, turned marginally deflationary. Pulses also stayed deeply negative, extending a trend seen since early summer as better output and lower procurement pressures kept prices under check.

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Non-Food Articles Provide Partial Cushion to WPI

Non-food primary articles helped offset some of the drag from food prices. Oilseeds inflation rose sharply in November, driven by supply-side constraints and firm global cues, pushing inflation in the segment close to double-digit levels.

Higher oilseed prices offered a meaningful counterbalance within the primary articles basket, signalling that not all agricultural commodities are facing deflationary pressures. Minerals inflation also strengthened during the month, reflecting firmer prices in construction- and industry-linked inputs.

For commodity-linked sectors, this divergence highlights how supply dynamics and global price movements are beginning to influence select segments, even as overall inflation remains subdued.

Fuel and Power Inflation Remains Negative but Improves Marginally

Inflation in the fuel and power category stayed in negative territory for another month, though the pace of contraction moderated in November.

Crude petroleum and natural gas prices continued to decline on a year-on-year basis, broadly tracking global energy trends. Petrol and diesel prices also remained lower than a year ago, contributing to the ongoing deflation in the segment.

However, analysts note that the narrowing pace of decline suggests energy prices may be nearing a base, especially if global crude prices stabilise or edge higher in the coming months.

Manufactured Products Show Limited Pricing Power

Inflation in manufactured products, which carry the largest weight in the WPI basket, eased slightly in November. The data points to muted pricing power across industrial sectors, reflecting weak demand conditions and limited cost-push pressures.

Manufactured food products saw a sharp cooling in inflation, dropping to below 1 percent after remaining in high single digits earlier in the year. Edible oils also recorded a pronounced deceleration following strong gains in the first quarter.

Core manufacturing segments—including chemicals, pharmaceuticals, textiles and basic metals—showed either modest price increases or mild deflation. This trend underscores the absence of broad-based input cost pressures and suggests that manufacturers are still cautious on pricing amid uneven demand.

Wholesale and Retail Inflation Signal a Benign Price Environment

The easing of wholesale deflation aligns with trends seen in consumer prices. Retail inflation has remained unusually low, staying below 2 percent in recent months, reinforcing the view that overall price pressures in the economy are well contained.

Together, the WPI and CPI data suggest a benign inflation environment, offering comfort to policymakers as they balance growth concerns against global uncertainties.

What November’s WPI Data Means for Investors

For investors, the narrowing of wholesale deflation carries several implications:

• Policy Support: Benign inflation gives the central bank room to maintain an accommodative stance if growth conditions warrant support.

• Margin Outlook: Easing deflation reduces pressure on corporate pricing and margins, especially for producers affected by sharp commodity price swings.

• Sector Signals: Diverging trends within commodities highlight selective opportunities in agri-linked and input-driven sectors.

However, analysts caution that a sustained recovery in wholesale inflation will depend on demand conditions, global commodity prices and weather-related risks to food supplies.

Outlook: Stabilisation, Not a Sharp Rebound

While November’s data points to easing deflationary pressures, wholesale inflation remains below zero, indicating that a sharp rebound is unlikely in the near term. Instead, experts expect a gradual normalisation, with WPI potentially moving into positive territory only if food prices firm further and global input costs stabilise.

For now, the price outlook remains benign, providing a stable macro backdrop even as global economic conditions continue to evolve.

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