Wholesale Inflation Turns Positive, Hits 0.83% in December 2024

India’s wholesale inflation rose to 0.83% in December 2024, marking a continued upward trend from November’s 0.73%. The Ministry of Commerce and Industry data, released on Tuesday, indicates a firming up of prices across key sectors, primarily driven by food and fuel.

Key Takeaways

• WPI inflation increased to 0.83% in December from 0.73% in November.
• Food inflation surged to 5.39%, with vegetables at a sharp 26.30%.
• Retail inflation (CPI) also rose to 4.87% in the same month.

What Drove the Wholesale Price Rise?

The primary drivers behind the increase in the Wholesale Price Index (WPI) were:

• Food Articles: Inflation accelerated to 5.39% from 4.69%. Within this, vegetable prices soared to 26.30%, pulses remained high at 17.46%, and fruits were at 9.30%.
• Fuel & Power: Deflation softened to (-)0.52% from (-)1.01% in November, indicating less downward pressure.
• Manufactured Products: Remained in deflationary territory at (-)0.71%, though improved from (-)0.84%.

The government also revised the October WPI inflation figure upward to 0.36% from the earlier estimate of 0.20%.

Retail Inflation Also on the Upswing

Mirroring the wholesale trend, India’s retail inflation, measured by the Consumer Price Index (CPI), rose to 4.87% in December from 4.70% in November. The key pressure point was food inflation, which climbed to 8.70%.

• Vegetable inflation: 27.64%
• Pulses inflation: 17.59%
• Cereals inflation: 7.93%

Implications for Monetary Policy

The Reserve Bank of India (RBI) primarily monitors retail inflation data when setting its monetary policy. The central bank’s mandate is to maintain CPI inflation at 4%, with a tolerance band of 2% to 6%. The persistent rise in food prices, evident in both WPI and CPI, will be a critical factor in the RBI’s upcoming policy reviews .