Key Takeaways
- India’s wholesale inflation turned positive in December 2025 at 0.83%, ending a two-month deflationary phase.
- The rise was driven by higher prices of food, minerals, and manufactured goods, offsetting deflation in fuel and power.
- Core WPI inflation hit a 34-month high of 2%, reflecting global commodity price trends and rupee depreciation.
- Analysts expect WPI inflation to rise further in January 2026 to 1.5%.
India’s wholesale price inflation returned to positive territory in December 2025, rising for the second consecutive month. The Wholesale Price Index (WPI) stood at 0.83% year-on-year, up from -0.32% in November, marking an end to the recent deflationary trend.
What Drove the Inflation Uptick?
Official data from the Department for Promotion of Industry and Internal Trade (DPIIT) attributed the positive inflation primarily to price increases in manufacturing, minerals, machinery, food products, and textiles.
Sequentially, prices of primary articles (including food and minerals) rose 0.21% from November. Manufactured product prices increased by a sharper 1.82%. This was partly offset by a 2.31% deflation in the fuel and power category.
Within primary articles, mineral prices rose 1.62% and food articles increased 0.88%. In the fuel segment, electricity prices surged 4.46%, while coal and mineral oil saw modest increases.
Analyst Views and Core Inflation Pressure
“While the WPI expectedly reverted to an inflation of 0.8% in December 2025 after a gap of two months, the reading was mildly higher than ICRA’s expectations (+0.4%),” said Rahul Agrawal, senior economist at ICRA Ltd.
The rise in wholesale inflation follows a similar uptick in retail inflation. The Consumer Price Index (CPI) rose to 1.3% in December, a three-month high. Consequently, the gap between CPI and WPI inflation narrowed to 50 basis points.
More significantly, core WPI inflation—tracking non-food manufactured items—rose to a 34-month high of 2% in December from 1.5% in November. Agrawal linked this to hardening global commodity prices and the recent depreciation of the rupee, which increased the landed cost of imports.
Outlook and Policy Implications
ICRA expects wholesale food inflation to harden further in January 2026 and remain on an upward trajectory due to an unfavourable base effect. Global commodity prices have continued rising sequentially in January, led by precious metals and industrial metals, despite cooling oil prices.
The ratings agency projects WPI inflation at 1.5% year-on-year in January.
Inflation trends are closely monitored by policymakers and influence the Reserve Bank of India’s interest rate decisions. A recent suggested the RBI’s Monetary Policy Committee is likely to hold rates in FY27, as price pressures are expected to stay within the central bank’s 2-6% target band.
“Also, next fiscal, we expect economic growth to ease but remain above trend,” the report added.
