Wholesale inflation eases to a three-month low of 0.27% in January

Deflation in the core wholesale index and a decline in food prices pushed wholesale inflation to a three-month low of 0.27% in January compared with 0.73% in the previous month, according to data released Wednesday.

“Contrary to expectations, the WPI inflation eased to 0.3% in year-on-year terms in January 2024 from 0.7% in December 2023. This was largely led by the WPI-food and core (manufactured non-food products) items, with the latter remaining in the deflationary zone for the eleventh straight month,” said Aditi Nayar, chief economist, Icra.

Sequentially, the wholesale price index was down 0.3%, with the food index declining 1% and manufactured products continuing its deflation for a second consecutive month. Prices of manufactured products in January were down 1% sequentially as well.


Retail inflation also eased to 5.1% in January on the back of a sequential decline in food prices and easing core inflation.

Experts indicate that wholesale inflation will likely stay contained for the remainder of the fiscal as well.

“Volatility in international crude oil prices will remain a concern, owing to tensions in the Red Sea region. Moderation in the trend of food prices and continued decline in international commodity prices will however provide cushion to the headline number,” said Sonal Bardhan, economist, Bank of Baroda.

Icra projects inflation to stay stable at 0.3% in February and remain sub-1% in March.

“Ind-Ra expects the wholesale inflation to come in at 0.5% in February 2024. However, in view of retail inflation still being higher than RBI’s comfort level, India Ratings and Research expects RBI to maintain a pause on the policy rate in the near term,” said economists Sunil Kumar Sinha & Paras Jasrai, India Ratings and Research.

The Monetary Policy Committee held the policy rate at 6.5% for the sixth consecutive time at its February meeting. Experts indicate that the Reserve Bank of India is unlikely to move on rates before the June or August meeting.

Manufactured products in deflation
Among the three major categories, manufactured products, which have nearly two-thirds weight in the wholesale basket, slipped further into deflation in January with a 1.1% decline compared with 0.7% in the previous month, whereas inflation eased for primary articles to 3.84% from 5.78% earlier.

“Within food article, the items that are contributing significantly to wholesale inflation are paddy, pulses and vegetables. Within vegetables the item that is bothering consumers is onion. Onion inflation came in at 29.18% in January 2024,” said Ind-Ra economists.