Wholesale inflation rises to 9-month high in December: Here's why
India saw a surge in wholesale inflation, hitting a nine-month high of 0.73% in December 2023, as per the Ministry of Commerce and Industry. This follows the announcement of a four-month high in retail inflation at 5.69% for the same month. The Wholesale Price Index (WPI) inflation was previously at 0.26% in November 2023 and 5.02% in December 2022. Despite the recent increase, the average WPI inflation for 2023-24 remains in the deflationary zone at -1.1%.
Factors contributing to the rise in wholesale inflation
The spike in wholesale inflation in December 2023 can be attributed to an unfavorable base effect, with the all-commodity index of the WPI contracting by 1.3% month-on-month (MoM) in December 2022. In December 2023, price indices for primary articles, fuel and power, and manufactured products all experienced declines compared to the previous month, with respective MoM drops of 2.1%, 0.71%, and 0.21%.
CPI inflation will decrease to 4% in Q2 FY24: RBI
As a result, the all-commodity index of the WPI decreased by 0.85% MoM, while the food index fell by 1.75% due to sequential price drops in vegetables, fruits, eggs, meat, fish, and pulses. The Reserve Bank of India (RBI) predicts that average Consumer Price Index (CPI) inflation will decrease to 4% in July-September 2024 before climbing to 4.7% in the final quarter of the calendar year.
