Indian Wholesale Price Index (WPI)-based inflation rose to a nine-month high of 0.73 percent in December, mainly due to a rise in food prices, data released by the Ministry of Commerce and Industry showed on Monday has released.
This is the second month in a row that wholesale inflation has remained positive, after recording deflation for seven consecutive months until October 2023. In November, factory inflation was 0.26 percent.
Food inflation rose to a four-month high of 9.38 percent in December, compared to 8.18 percent in the previous month, led by an acceleration in the prices of paddy (10.54 percent) and vegetables ( 26.3 percent). Meanwhile, prices of onions (91.77 percent) and pulses (26.3 percent) fell in December, but inflation was still high.
On the other hand, prices of other food items such as wheat (-0.40 percent), potatoes (-24.08 percent) and protein-rich products such as eggs, meat and fish (-0.84 percent) fell during the month.
In addition, the data showed that deflation in manufactured product prices (-0.71 percent) continued for the tenth consecutive month in December, led by a continued decline in manufactured food prices (-1.59 percent), vegetable and animal oil. (-16.36 percent), textiles (-2.91 percent), paper (-6.67 percent), chemicals (-5.69 percent), metals (-2.58 percent), rubber (-0.55 percent) and steel (-3.36 percent).
Moreover, the decline in fuel prices (-2.41 percent) continued for the eighth month in a row, led by the continued decline in high-speed diesel prices (-6.72 percent). However, gasoline prices increased slightly during the month (1.09 percent).
| 9 months high…. | ||
| month | WPI (Annual%) | WPI Food (Annual) % |
| January 2022 | 13.68 | 10.4 |
| February | 13.43 | 8.19 |
| March | 14.63 | 8.44 |
| April | 15.38 | 8.48 |
| Be able to | 16.63 | 11.78 |
| June | 16.23 | 13.71 |
| July | 14.07 | 10.77 |
| August | 12.48 | 12.55 |
| September | 10.55 | 11.03 |
| October | 8.67 | 8.45 |
| November | 6.12 | 1.51 |
| December | 5.02 | -1.02 |
| January 2023 | 4.8 | 2.67 |
| February | 3.85 | 3.81 |
| March | 1.41 | 5.42 |
| April | -0.79 | 3.88 |
| Be able to | -3.61 | 1.63 |
| June | -4.18 | 1.32 |
| July | -1.23 | 15.09 |
| August | -0.46 | 11.43 |
| September | -0.07 | 3.79 |
| October | -0.26 | 3.17 |
| November* | 0.26 | 8.18 |
| December* | 0.73 | 9.38 |
| Source: Ministry of Trade and Industry | ||
| *Provisional | ||
Rajani Sinha, chief economist at CARE Ratings, said the WPI remained in the positive territory for the second time in this financial year (FY24) due to a sharp rise in wholesale food inflation coupled with the fading base effect even as deflation continues . manufacturing products and fuel and energy segments.
“Despite the fading of a supportive base effect, WPI inflation is expected to remain around 1 percent for the remainder of this financial year, while global commodity prices continue to decline. However, uncertainty surrounding the Kharif crop, Rabi sowing progress, geopolitical tensions in the Middle East and global growth dynamics remain important factors to monitor,” Sinha said.
The rise in factory inflation comes days after retail inflation rose to a four-month high of 5.69 percent in December, up 14 basis points from November on the back of a seasonal spike in food prices, led by fruits, vegetables and legumes. While the Reserve Bank of India (RBI) tracks retail inflation for its monetary policy, the revival in WPI would ultimately impact the consumer price index, albeit with some delay.
First print: January 15, 2024 | 6:04 PM IST