India's inflation, based on the Wholesale Price Index (WPI), rose to a nine-month high of 0.73 percent in December 2023.
New Delhi: Worryingly, India's Whole Price Index rose to a nine-month high of 0.73 percent in December 2023, up from 0.26 percent in November. The data released by the government shows that the increase in inflation is due to the increase in food prices. Moreover, it is also to be noted that November's WPI turned positive after remaining in negative territory for the past seven months, according to a report by news agency IANS.
Positive inflation rate in December 2023
The positive inflation rate in December 2023 is mainly due to the increase in prices of food items, machinery and equipment, other inputs, other transportation equipment and computers, electronics and optical products, the Commerce Ministry said. The figures show an increase in wholesale food prices by 9.38 percent, while those of the fuel group fell by (-) 2.14 percent.
Retail inflation figures released earlier this month showed a rise of 5.69 percent in December, up from 5.55 percent in November, with higher food prices putting pressure on household budgets.
Figures on rising food inflation
Food inflation, which makes up almost half of the overall consumer price index (CPI), shot up 9.05 percent from 8.657 percent in November. Prices of vegetables, pulses, spices and fruits rose sharply during the month. However, there was some comfort in the decline in cooking oil prices during the month. The RBI bases its monetary policy on retail inflation figures.
Suman Chowdhury, Chief Economist and Head of Research, Acuité Ratings & Research, said, “As per expectations, the WPI trajectory has remained favorable at 0.73 per cent YoY in December 2023, compared to 0.26 per cent YoY in November 2023. While the slight increase on an annual basis Due to the basic factor, there is a consecutive contraction of 0.9 percent, which is seasonal due to the softness of food items.”
“Wholesale inflation for industrial goods remains in the contraction zone, at -0.7 percent on an annual basis and at – percent on a monthly basis. It is the tenth month in a row that inflation in the industrial sector has remained deflationary. Furthermore, the fuel and energy category also showed the same trend: – percent on an annual basis and -0.7 percent on a monthly basis. This indicates that input costs remain favorable for the industrial segment in the absence of strong global demand.
“In the near term, the deflationary trend in industrial goods is likely to persist. Overall WPI inflation is expected to be driven by the trend in the food category and in the absence of any major surprises, it should remain between 0 percent and 1.0 percent,” Chowdhury said.
(With input from agencies)