India’s wholesale inflation rose in December, led by a surge in prices of various commodities.
The wholesale price index rose 2.37% in December, compared to 1.89% in November, according to data released by the Ministry of Commerce and Industry on Tuesday.
On a sequential basis, the index declined 0.38%, compared to a 0.5% decline in the previous month.
Global commodity prices have risen slightly so far in January 2025 compared to December 2024. ICRA Chief Economist Aditi Nayar said the average price of the Indian basket of crude oil rose 5.8% month-on-month during January 1-13, 2025, especially amid tighter US sanctions on Russian oil producers and shippers.
Moreover, the recent sharp decline in the USD/INR pair from 85 to above 86.5 in mid-December 2024 will also put some upward pressure on the cost of imports, he said.
Overall, ICRA expects headline WPI inflation to rise to around 3% in January 2025 from 2.4% in December 2024 due to the surge in crude oil and commodity prices and the decline in the USD/INR pair as well as an unfavourable base.
While core and non-food articles drive 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, according to a note by India Ratings.
WPI Inflation Internals (Year-On-Year)
- Inflation in manufactured products – the largest component of the index – rose to 2.14% in December compared to 2% in November.
- Inflation in primary articles rose to 6.02% in December compared to 5.5% in November.
- Food inflation – a sub-component of primary articles – rose to 8.47%, compared with an 8.6% rise in November.
- Vegetable inflation rose 28.65% in December, almost equal to the previous month.
*Potato and onion prices saw a rise on a year-on-year basis, with wholesale inflation at 93.2% and 16.8%, respectively.
- Fuel and power inflation declined to 3.79% in December, compared with a 5.8% decline in November.
