WPI-based inflation increases to 0.73% in December on rise in food prices

Positive rate of inflation in December, 2023 was primarily due to an increase in prices of food articles, machinery & equipment, other manufacturing, other transport equipment

The wholesale price index (WPI)-based inflation came in at 0.73 per cent for December 2023, up from 0.26 in November, according to the data released by the Ministry of Commerce and Industry on Monday. WPI has continued its upward trajectory after returning to positive territory in November after seven months. Earlier in March, the WPI-based inflation was 1.34 per cent before falling to -0.92 per cent in April.

"Positive rate of inflation in December, 2023 is primarily due to increase in prices of food articles, machinery & equipment, other manufacturing, other transport equipment and computer, electronics & optical products etc.," the ministry said in the announcement.

The decline in the rate of inflation in April had been primarily attributed to a fall in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical and chemical products, rubber and plastic products and paper and paper products.

The rise in WPI-based inflation in November was led by food inflation. The index in this category rose steeply by 4.69 per cent in November as compared to 1.07 per cent in October and 1.88 per cent in September.

The index for all major groups, including primary articles, fuel, and manufactured products declined month-on-month last month.

In the primary articles, the index was -2.14 per cent compared to 0.26 per cent in November, followed by -0.71 per cent in the index for fuel (0.86 per cent in November), and -0.21 per cent in manufactured products (-0.13 per cent in November).

Retail inflation hits four-month high in December 2023

On Friday last week, the Ministry of Statistics and Programme Implementation (MoSPI) revealed that India's retail inflation hit a four-month high of 5.69 per cent in December, compared to 5.55 per cent in November. This is above the Reserve Bank of India's (RBI) medium-term target of four per cent, but within its 2–6 per cent tolerance range. This is the 51st consecutive month that the retail inflation has remained above the RBI's medium.

Rise in food prices was primarily responsible for the jump in inflation. The food inflation came in at 9.53 per cent in December, up from 8.7 per cent in November 2023. In December 2022, it was 4.19 per cent.

In early December, the governor of RBI, Shaktikanta Das, warned that the inflation figures may show an uptick in November and December owing to food output pressures. "Taking into account these factors and on the assumption of normal monsoons, CPI-based inflation is projected at 5.4 per cent for 2023-24, with Q3 at 5.6 per cent and Q4 at 5.2 per cent," Das had said.