Wholesale Price Index (WPI) based inflation remained below zero continuously from April to October.
(Photo credits: TV9 Bharatvarsh)
Wholesale inflation increased to 0.73 percent in December 2023. This is its nine-month high. This increase was due to the sharp rise in the prices of food items, especially vegetables and pulses. Wholesale Price Index (WPI) based inflation remained below zero continuously from April to October. In November it was 0.26 percent. In December, 2022 it was at the level of 5.02 percent. According to the statement issued by the Ministry of Commerce and Industry, the increase in prices of goods, machinery and equipment, manufacturing, transport other equipment and computers, electronic and optical products etc. was the reason for the increase in wholesale inflation in December 2023.
The previous high level of wholesale inflation was recorded in March 2023. At that time it was 1.41 percent. Inflation in food items increased to 9.38 percent in December, which was 8.18 percent in November. In December, the inflation rate of vegetables was 26.30 percent, while the inflation rate of pulses was 19.60 percent. Among food items, the major contributors to wholesale inflation were paddy, pulses and vegetables. In December, 2023, inflation in vegetables and pulses was 26.30 percent and 19.60 percent respectively, while in paddy it was 10.54 percent.
Among vegetables, onion inflation was 91.77 percent. It has remained in double digits continuously since August 2023. The annual rate of price increase in potatoes in December was minus 24.08 percent. Inflation in the fuel and power sector stood at minus 2.41 percent in December, while it was minus 4.61 percent in November 2023. Inflation in manufactured products was minus 0.71 percent, while in November 2023 it was minus 0.64 percent. Barclays report said that wholesale inflation data shows that the cost of raw materials is under control and the prices of food and manufactured products have come down significantly.
Barclays said that we hope that the Reserve Bank of India will liberalize the monetary policy from June. In the current calendar year 2024, the repo rate may be reduced thrice by 0.25 percent. Rating agency ICRA said the increase in WPI inflation was due to fuel, food and crude oil related items, while inflation of manufactured non-food items remained below zero for the 10th consecutive month. India Ratings and Research expects wholesale inflation to reach 1.1 percent in January 2024. According to official data released last week, retail or consumer price index (CPI) based inflation for December rose to a four-month high of 5.69 percent.
Published – January 15, 2024, 07:07 IST
Money9 App for latest updates on personal finance download.