WPI Inflation Eases to 2.31% in January Due to Decline in Food Prices

India's wholesale price index (WPI) cooled to 2.31% in January as compared to 2.37% in December last year, according to Ministry of Commerce and Industry data released on Friday. It noted that even as the price of food articles decreased in January by 3.62% as compared to December, the price of crude petroleum and natural gas, non-food articles and minerals increased during the same period.

WPI defines goods sold at the wholesale level or goods that are traded between businesses instead of directly to the consumers.

WPI food index also fell to 7.47% in January against 8.89% in December

The WPI Food Index fell to 7.47% in January 2025, compared to 8.89% in December 2024, suggesting a moderate easing in food price pressures.

Meanwhile, fuel prices declined by 2.78% in January against a 3.79% dip in the previous month. On the other hand, manufacturing inflation surged to 2.51%, up from 2.14% in December.

Retail Inflation Eases to Five-Month Low

India's retail inflation, based on the consumer price index (CPI), eased to a five-month low of 4.31% in January, according to data released by the government earlier this week. It was primarily driven by the lower food prices.

The inflation rate dropped from 5.22% in December last year and is the lowest year-on-year inflation since August 2024. Inflation reached a 14-month high at 6.21% in October same year.

Rural inflation eased to 4.64% against 5.76% in December and urban inflation cooled at 3.87% compared to 4.58 the previous month.

The ease in inflation rate also boosted hope for a further rate cut by the Reserve Bank of India (RBI) during its next Monetary Policy Meeting (MPC).

Slowdown in Industrial Production

While inflation data shows a positive sign, India's Index of Industrial Production (IIP) growth registered a four-month low of 3.2% in December. IIP grew at a six-month high of 5% in the previous month.

This decrease is primarily driven by the slowing of manufacturing output. After rising by 5.8% in November, the sectoral output increased by 3% in December.