India's inflation based on the Wholesale Price Index (WPI) crashed to a 19-month low of 8.39 percent in October, data released by the commerce ministry showed on November 14.
This is also the first time in 19 months that WPI inflation has fallen to single digits, after staying above 10 percent for the last one-and-a-half years.
WPI inflation was 10.7 percent in September and in October 2021, it stood at 13.83 percent.
The sharp decline in WPI inflation in October was on a fall in prices of fuel items and manufactured products and a favourable base effect.
While fuel and power inflation fell nearly a third to 23.17 percent from 32.61 percent in September, prices for manufactured products declined to 4.42 percent from 6.34 percent.
The fall in inflation of manufactured products is key as these items account for nearly two-thirds of the entire WPI basket.
While the indices for the "fuel and power" as well as "manufactured products" groups fell month-on-month in October, that of food increased. However, food prices still fell, thanks to a favourable base effect, to 6.48 percent from 8.08 percent.
Overall, the all-commodity index of the WPI rose by 0.3 percent on a month-on-month basis in October after posting sequential falls in July, August and September.
The wholesale inflation numbers were shares hours before the statistics ministry releases the data on the more closely-tracked retail inflation.
At 5.30 pm, the government will release Consumer Price Index (CPI) data for October. As per a Moneycontrol poll, CPI inflation likely fell to 6.7 percent from 7.41 percent in September.
While the Reserve Bank of India (RBI) has already failed to meet its inflation mandate—with average CPI inflation staying outside the tolerance range of 2-6 percent for three consecutive quarters—a decline in headline retail inflation following a big drop in wholesale inflation will be a source of relief to policymakers.
The data, however, is unlikely to make the central bank shift significantly from the path it has charted to lower inflation, with economists expecting another repo rate hike in December.
The RBI has raised the repo rate by a staggering 190 basis points in the last six-and-a-half months to 5.9 percent. Its monetary policy committee will meet from December 5-7.