India’s wholesale price growth notched another month of deceleration in October, edging lower from a recent high only seven months after exiting a prolonged stretch of deflation.

Headline wholesale price inflation dipped last month to 3.39 per cent year on year, down from 3.57 per cent and on the low side of a median forecast of 3.74 per cent from economists.

Much of the downward pull came from wholesale food prices, a sub-index for which continued a fall from 8.23 per cent in August to 4.34 per cent last month. Meanwhile an index tracking manufacturing prices rose only about 0.2 percentage points from September to 2.67 per cent in September.

Fuel prices provided perhaps the biggest boost to the headline rate, accelerating to annualised growth of 6.18 per cent in October from 5.58 per cent a month earlier.

Looming ahead for November’s numbers is the impact of Indian prime minister Narendra Modi’s recent move to scrap most of the country’s existing banknotes – a dramatic policy affecting nearly 83 per cent of the rupees in circulation throughout India’s largely cash-driven economy.

The surprise move, meant to combat corruption but which also came in the middle of India’s wedding season, is likely to exert a continued drag on sales, dampening price growth. It has been viewed as undercutting consumption as citizens struggle to exchange their old notes for limited supplies of the new versions.

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