India's wholesale inflation rises to 9-month high of 0.73% in December

The wholesale inflation data comes days after the statistics ministry said on January 12 that the headline retail inflation rate rose to a four-month high of 5.69 percent in December.

India's wholesale inflation rose to a nine-month high of 0.73 percent in December, data released by the commerce ministry on January 15 showed. Wholesale Price Index (WPI) inflation was at 0.26 percent in November 2023 and 5.02 percent in December 2022.

At 0.73 percent, it is the second month in a row that wholesale inflation has printed in above zero. However, for 2023-24 as a whole, average WPI inflation remains in the deflationary zone at -1.1 percent.

The latest WPI data comes days after the statistics ministry said headline retail inflation rose to a four-month high of 5.69 percent in December, up 14 basis points from November.

One basis point is one-hundredth of a percentage point.

To be sure, the rise in WPI inflation in the last month of 2023 was driven by a highly unfavourable base effect. In December 2022 - the month that forms the base for calculating the rate of inflation for December 2023 - the all-commodity index of the WPI had contracted by 1.3 percent month-on-month (MoM). As such, even though the price momentum - or rise in wholesale prices from one month to the next - weakened, inflation rose from 0.26 percent in November to 0.73 percent in December.

In December, the price indices for all three major groups of the WPI were lower than the previous month:

>> Primary articles price index down 2.1 percent MoM

>> Fuel and power price index down 0.71 percent MoM

>> Manufactured products price index down 0.21 percent MoM

As a result, the all-commodity index of the WPI was down 0.85 percent MoM, while the food index was 1.75 percent lower from November, thanks to a sequential drop in prices of vegetables, fruits, eggs, meat, fish, and pulses.

Also Read: Cooking at home gets 3-5% cheaper as veggies, chicken cost less

A rise in wholesale inflation in December was expected, and economists see it increasing further in the coming months even as headline retail inflation eases from current levels. According to the Reserve Bank of India's forecasts, average Consumer Price Index (CPI) inflation is expected to cool to 4 percent in July-September 2024 before rising to 4.7 percent in the last quarter of the calendar year.

CPI inflation averaged 5.4 percent in October-December 2023.