India's Wholesale Inflation Jumps To 0.73 Per Cent In December On Rise In Food Prices

Positive rate of inflation in December 2023 is primarily due to increase in prices of food articles, machinery & equipment, according to the commerce and industry ministry

India's wholesale price index (WPI)-based inflation jumped in December at 0.73 per cent, mainly because of a sharp rise in food prices. The WPI inflation was in the negative zone from April to October and had turned positive in November at 0.26 per cent. Earlier in March 2023, the WPI-based inflation was 1.34 per cent before falling to -0.92 per cent in April.

The commerce and industry ministry in a statement on Monday said, "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." 

Retail or consumer price-based inflation (CPI) for December rose to a 4-month high of 5.69 per cent, according to the CPI inflation data released last Friday. The jump in CPI inflation was mainly because of rising food prices. The inflation in food came in at 9.53 per cent in December, whereas in November it was recorded 8.7 per cent. The highest inflation was recorded in the food and beverages category at 8.70 per cent. 

The Reserve Bank of India (RBI) in its bi-monthly monetary policy last month held interest rates steady and flagged risks of rising food inflation in November and December. 

The RBI in its last MPC estimated the Consumer Price Index (CPI) based retail inflation to remain at 5.4 per cent in the current fiscal year. Earlier, the growth projection for FY24 was increased to 7 per cent from 6.5 per cent. Notably, the MPC meet happened against the backdrop of inflation reducing to 4.87 per cent in October, while the data for inflation in November is set to be announced next week. The government has mandated the RBI to maintain CPI inflation at 4 per cent, with a margin of 2 per cent on either side.