India’s wholesale inflation, measured by the Wholesale Price Index (WPI), eased to 2.05 percent in March, down from 2.38 percent in February, according to data released by the Ministry of Commerce and Industry on Tuesday. The slight moderation in price pressures was driven largely by falling prices in the food and fuel & power categories, even as manufactured products saw a continued rise.
The WPI captures the average change in prices of goods sold in bulk at the wholesale level, and serves as an indicator of supply-demand dynamics across sectors like manufacturing and construction.
A declining WPI can have both positive and negative consequences. While it may indicate a slowdown in inflation, it could also signal slower economic growth. RBI and government agencies use WPI data to formulate and adjust monetary and fiscal policies, including interest rates and subsidies, to stabilise the economy.
Prices of primary articles — which include food items and crude oil — declined by 1.07 percent month-on-month. Within this group, crude petroleum and natural gas prices dropped by 2.42 percent, non-food articles fell by 2.40 percent, and food articles dipped by 0.72 percent. Minerals, however, recorded a slight price increase of 0.31 percent.
The WPI Food Index, which comprises food articles and manufactured food products, edged down from 189.0 in February to 188.8 in March. The food inflation rate accordingly slowed to 4.66 percent in March, compared to 5.94 percent in the previous month.
The WPI inflation for the fuel and power group stood at 0.20 percent in March, up from -0.71 percent in February. However, the group’s index contracted by 0.91 percent month-on-month, primarily due to a 2.31 percent drop in electricity prices and a 0.70 percent fall in mineral oil prices. Coal prices remained unchanged during the month.
Manufactured products, which constitute the largest weight in the WPI basket, recorded an inflation rate of 3.07 percent in March, up from 2.86 percent in February. Month-on-month, prices in this segment rose by 0.42 percent. Key contributors to the increase included basic metals, food products, transport equipment, and machinery. Meanwhile, prices declined in textiles, chemicals, electronics, printing, and furniture.
In a related development, India’s industrial output, as measured by the Index of Industrial Production (IIP), grew at its slowest pace in six months — rising by 2.9 percent in February 2025, down from 5.01 percent in January. According to data released earlier by the National Statistics Office (NSO), manufacturing growth slowed to 2.9 percent, while mining and electricity output grew by 1.6 per cent and 3.6 per cent, respectively.
