India's wholesale inflation rises in December, food inflation nears 9%
14 Jan 2025

India's wholesale inflation, measured by the Wholesale Price Index (WPI), increased to 2.37% in December from 1.89% in November, despite a marginal change in food prices.

This is a 25% increase month-over-month. The highest increase was recorded in primary articles inflation, which surged to 6.02% from 5.49%.

Meanwhile, retail inflation saw a slight dip during this period, falling from 5.48% to 5.22%.

Food inflation and vegetable prices
Price changes

Food inflation witnessed a slight uptick in December, hitting 8.89% from November's 8.29%.

Vegetable prices also witnessed a year-on-year increase of 28.65%, slightly higher than last month's 28.57% rise.

Onion inflation jumped drastically to 16.81% in December from a mere 2.85% in November, while potato inflation also surged sharply to an astounding 93.20%, up from November's already high 82.79%.

Fuel, power, and manufactured products prices
Market trends

Unlike food items, fuel and power prices contracted at a slower pace in December, falling 3.79% as opposed to November's 5.83% drop.

The cost of manufactured products, which account for nearly 64% of the WPI, rose marginally by 2.14%, up from a 2% rise in November.

These changes reflect varied inflationary trends across different sectors of the Indian economy.

RBI's response to inflation trends
Monetary policy

In December, the Reserve Bank of India(RBI) revised its growth forecast for this fiscal year down to 6.6% from 7.2%.

It also raised its inflation estimates to 4.8% from 4.5%, citing concerns over food inflation.

The central bank's Monetary Policy Committee (MPC) maintained a neutral stance, indicating the possibility of rate cuts if inflationary pressures ease in future months.