Wholesale inflation eases to 1.22% in December

Wholesale inflation in India fell to 1.22% in December driven by lower food inflation, data released by the commerce and industry ministry showed on Thursday.

The inflation based on Wholesale Price Index (WPI) was 1.55% in November 2020, and 2.76% in December 2019.

Inflation in food articles inflation contracted 1.11% after rising 3.94% last month while that in fuel and power index contracted 8.72% against a fall of 9.87% in November. Manufactured products inflation rose 4.24% against a 2.97% rise in the previous month.


“The headline WPI inflation recorded a pullback in December 2020 driven by a disinflation in primary food items and lower inflation for primary non-food articles, even as core inflation spiked to a 24 month high 4.2%, injecting concern regarding the trajectory of the WPI going forward,” said Aditi Nayar, principal economist at ICRA.

Data released last week showed retail inflation falling to 4.59% in December from 6.93% in November, that brought the CPI back within the Monetary Policy Committee’s target range of 2-6% for the first time since March 2020.

“The surge in the core-WPI inflation has completely doused any lingering hope that the dip in the December 2020 CPI inflation would be adequate for rate easing to recommence in the upcoming policy review,” Nayar added.

The next meeting of the MPC is scheduled from February 3-5.