India's Wholesale Price Index (WPI)-based inflation reached a nine-month high at 0.73% in December 2023, up from 0.26% in November, as per official data released on Monday. The WPI-based inflation turned positive in November after remaining in negative territory for the preceding seven months.
The positive inflation rate in December is attributed to increases in prices of food articles, machinery & equipment, other manufacturing, other transport equipment, and computer, electronics & optical products, according to the Commerce ministry. Wholesale food prices saw a 9.38% increase, while fuel group prices declined by (-) 2.14%.
Earlier this month, retail inflation figures indicated a 5.69% increase in December compared to 5.55% in November, primarily due to higher food prices. Food inflation, constituting nearly half of the overall Consumer Price Index (CPI), rose by 9.05%, with notable increases in the prices of vegetables, pulses, spices, and fruits. However, cooking oil prices declined during the month.
The Reserve Bank of India (RBI) bases its monetary policy decisions on retail inflation figures. The Wholesale Price Index trajectory is considered benign, with a slight annualized uptick due to base factors. Manufacturing inflation has persistently remained in deflation mode, while the fuel and power category has shown a similar trend, indicating favorable input costs for the industrial segment in the absence of strong global demand.
Looking ahead, experts suggest that the deflationary trend in manufactured goods may persist in the near term, and overall WPI inflation is expected to remain range-bound between 0% and 1.0%, influenced by trends in the food category and the absence of major surprises.
(With Agency Inputs)
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