The deflation in wholesale prices has now persisted for a year. These began to fall on an annual basis from November last year. The index of wholesale prices is now at a level that has not been seen since July 2013. In other words, aggregate wholesale prices are now at a level they were more than two years ago.
There are signs the deflationary trend has bottomed out. The new data released on Monday shows the actual index number has been inching up over the past three months, even though it is below its level a year ago in each of these months. But, it is advancing at a glacial pace. It is quite likely that India will see several more months of wholesale price deflation before inflation makes an appearance again.
It also means the divergent trajectories of wholesale and consumer prices could persist, at least as long as the global commodity downturn continues. This divergence will continue to fox policymakers.