India's Wholesale Price Inflation Remains in Negative Territory, How it Helps Economy

India”s wholesale price index (WPI) inflation remained in the negative zone for the seventh consecutive month in October at (-) 0.52 percent, with prices of food items, chemical products, and textiles decreasing. Sequentially, wholesale prices have dipped further, as the wholesale inflation for September was estimated at (-) 0.26 percent.

In October last year, WPI stood at 8.67 percent.

“The negative rate of inflation in October 2023 is primarily due to a fall in prices of chemicals and chemical products, electricity, textiles, basic metals, food products, paper, and paper products as compared to the corresponding month of the previous year,” said the Commerce and Industry Ministry.

Wholesale price inflation (WPI) refers to average change in prices paid by wholesalers for goods and services over a specified period. It has significant impact on Consumer Price Index (CPI) based on inflation which refers to average change in retail prices paid by consumers and hence there are many benefits for companies and economy if WPI remains low.

The Benefits as follows:

1. When WPI is low, the companies can procure raw material at lowest cost leading to lower product prices, high profitability, increased income generation, higher investments and innovation.

2.Low Wholesale prices contribute to stable consumer prices which may in turn develop higher purchasing capacity

3.Increased income with high employment opportunities will also lead to more purchasing capacity.

4. When purchasing power increases, it will serve as an economic stimulus and lead to economic prosperity period.

5. Low WPI also helps prevent deflation as prices remain stable.