In line with the moderation in retail inflation, wholesale inflation in India too witnessed a decline in January.
The annual rate of inflation based on all India Wholesale Price Index (WPI) number is 2.31 per cent (provisional) for January 2025, government data showed Friday.
The positive rate of inflation in January was primarily due to an increase in prices of manufacture of food products, food articles, other manufacturing, non-food articles and manufacture of textiles.
Wholesale inflation continues to remain in the positive territory for over a year now. Economists often say a little rise in wholesale inflation is good as it typically incentivizes goods manufacturers to produce more.
For the food index, which has 24.38 per cent weightage, the rate of wholesale inflation was at 7.47 per cent in January, against 8.89 per cent in December.
The government releases index numbers of wholesale prices on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.
In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative. Notably, the wholesale price index (WPI)–based inflation had been in double digits for 18 months in a row till September 2022.
Meanwhile, India’s retail inflation was at 4.3 per cent in January, hitting a five-month low and continuing to comfortably remain between RBI’s 2-6 per cent target range.
The country was facing high food inflation over the past few months, mainly due to an increase in the inflation of vegetables, fruits, oils and fats. It now seems to have abated. High food prices were a pain point for the policymakers in India, who wished to bring retail inflation to 4 per cent on a sustainable basis.
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The RBI had kept the repo rate elevated at 6.5 per cent for nearly five years to keep inflation contained. The repo rate is the rate of interest at which the RBI lends to other banks. The RBI has recently reduced the repo rate by 25 basis points to put a thrust on growth and consumption in the economy.
