Wholesale Inflation Rises To 2.37% In December

India's wholesale inflation rose in December, led by an uptick across commodities.

The Wholesale Price Index rose 2.37% in December, compared to 1.89% in November, showed data released by Ministry of Commerce and Industry on Tuesday.

On a sequential basis, the index fell by 0.38%, compared to a decline of 0.5% last month.

Global commodity prices have inched up in January 2025 so far vis-à-vis December 2024. The average price of the Indian basket of crude oil, in particular, has surged by 5.8% month-on-month during Jan. 1-13, 2025, amid tighter US sanctions on Russian oil producers and ships, said Aditi Nayar, chief economist at ICRA. Additionally, the recent sharp depreciation in the USD/INR pair to above 86.5 from sub-85 in mid-December 2024, would also exert some upward pressure on the landed cost of imports, she added.

Overall, ICRA expects the headline WPI inflation to rise further to about 3% in January 2025 from 2.4% in December 2024, with the uptick in crude oil and commodity prices and the depreciation in the USD/INR pair pushing up the print, along with an unfavourable base. According to a note by India ratings too, while core and non-food articles push up inflation in December 2024, wholesale inflation is expected to touch a two-year high of just under 3% during Q4 FY25 from 2.3% in Q3 FY25.

• Inflation in manufactured products—the largest component of the index—rose by 2.14% in December, compared to 2% in November.

• Primary-article inflation rose 6.02% in December, compared to 5.5% in November.

• Inflation in food articles—a sub-component of primary articles— rose 8.47%, compared to a rise of 8.6% in November.

• Vegetable inflation rose by 28.65% in December, almost the same as in the previous month. Potatoes and onions saw a rise in prices on an annual basis, with wholesale inflation at 93.2% and 16.8% respectively.

• Inflation in fuel and power fell by 3.79% in December, compared to a fall of 5.8% in November.