New Delhi
India’s inflation rate, as measured by the Wholesale Price Index (WPI), increased to a nine-month high of 0.73% in December 2023, up from 0.26% in November, according to official data released on Monday. This comes after the country’s WPI-based inflation turned positive in November following seven consecutive months in negative territory. The December 2023 inflation rate is primarily attributed to the rise in prices of food articles, machinery & equipment, other manufacturing, other transport equipment, and computer, electronics & optical products, as reported by the Commerce ministry. Key highlights of the WPI data include a 9.38% increase in wholesale food prices, while prices in the fuel group declined by (-) 2.14%. The positive trajectory in wholesale inflation aligns with the retail inflation figures released earlier this month, showing a 5.69% increase in December compared to 5.55% in November. Higher food prices, particularly in vegetables, pulses, spices, and fruits, contributed to the overall increase. Food inflation, constituting nearly half of the overall Consumer Price Index (CPI), recorded a significant uptick at 9.05% in December, up from 8.657% in November. Despite this, cooking oil prices witnessed a decline during the month. The Reserve Bank of India (RBI) bases its monetary policy decisions on retail inflation figures. Suman Chowdhury, Chief Economist and Head of Research at Acuité Ratings & Research, commented on the WPI trajectory, noting that it continued to be benign in December. He highlighted the sequential contraction in food articles and emphasized the persistent deflation in manufacturing inflation for ten successive months. The fuel and power category also exhibited a similar trend, indicating favorable input costs for the industrial segment amid weak global demand. As inflation trends play a crucial role in shaping economic policies, market participants are advised to closely monitor these developments for a comprehensive understanding of India’s economic landscape.
