NEW DELHI – India’s annual wholesale-price based inflation (WPI) eased to the lowest in nearly 30 months, as input prices continued to moderate, government data showed on Monday.
WPI in March was 1.34 percent year-on-year, lower than 3.85 percent in the previous month and a Reuters poll of 1.87 percent.
In March, the food index rose 2.32 percent year-on-year compared with 2.76 percent in February, while fuel and power rose 8.96 percent, slowing from the 14.82 percent rate.
WPI on manufactured products fell 0.28 percent, compared with a fall of 0.14 percent in the previous month.
“Input costs have fallen across the world. High base effect is also showing its impact,” said Emkay Global’s economist Madhavi Arora.
Inflation pressures in the South Asian country have begun to show signs of easing in the last few months.
Last week government data showed India’s annual retail inflation for March rose at the slowest pace in nearly 15 months and was below the central bank’s upper tolerance level for the first time this year.
Earlier this month, Reserve Bank of India surprised markets by holding its key repo rate steady after six consecutive hikes, saying the tightening over the past 12 months would start to weigh on the future inflation trajectory.
Forecast of normal monsoon rains in 2023 has helped ease some concern of another bout of price increases in Asia’s third largest economy.
India’s economic growth slowed further in the December quarter as pent up demand eased and weakness in the manufacturing sector continued.
Asia’s third largest economy recorded year-on-year growth of 4.4 percent in October-December, down from 6.3 percent in July-September, data released by the government showed. The sharp fall in the year-on-year growth rate is also partly due to a fading of pandemic-induced base effects and revision to last year’s growth, economists said.
October-December growth was below a Reuters forecast of 4.6 percent.
The government, however, retained its growth forecast of 7 percent for 2022/23 while revising higher growth for the previous year to 9.1 percent from the earlier 8.7 percent.
“We are likely to hit the 7 percent GDP growth target for the year,” said India’s chief economic advisor V. Anantha Nageswaran at a press briefing. Growth of 4-4.1 percent is possible in the January-March quarter, he said.
Even though a weaker global economy is likely to pull down India’s growth to near 6.4 percent next year, the International Monetary Fund (IMF) and the World Bank project India to be the fastest-growing major economy in 2023.
India’s manufacturing sector shrank by 1.1 percent year-on-year in the third quarter, a second straight contraction reflecting lower profit margins and weaker exports.
External demand was weak as central banks globally continued monetary tightening to tame inflation.
“The major disappointment is negative growth in manufacturing,” said Madan Sabnavis, economist at state-run Bank of Baroda. He said 2022/23 growth will be at 6.8 percent against a government estimate of 7 percent.
India’s private consumer spending, contributing around 60 percent of GDP, rose just 2.1 percent year-on-year in December quarter, compared to downwardly revised 8.8 percent increase in the previous quarter, while capital investment rose 8.3 percent year-on-year compared to revised 9.7 percent growth in the same period. — Reuters
