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New Delhi: In a matter of concern, the Whole Price Index of India rose to a nine-month high of 0.73 percent for December 2023, up from 0.26 percent in November. The data released by the government shows that the rise in inflation is due to the rise in prices of food items. Moreover, it should also be noted that the November WPI turned positive after sticking to negative territory for the preceding seven months, as per a report by news agency IANS.
The positive rate of inflation in December 2023 is primarily due to the increase in prices of food articles, machinery & equipment, other manufacturing, other transport equipment and computer, electronics & optical products, the Commerce Ministry said. The figures show a 9.38 percent increase in wholesale food prices, while those of the fuel group declined by (-) 2.14 percent.
The retail inflation figures released earlier this month showed a 5.69 percent increase in December, up from 5.55 percent in November, with higher food prices stretching household budgets.
Food inflation, which accounts for close to half of the overall consumer price index (CPI), shot up by 9.05 percent from 8.657 percent in November. The prices of vegetables, pulses, spices and fruits rose sharply during the month. However, there was some consolation in cooking oil prices declining during the month. The RBI bases its monetary policy on the retail inflation figures.
Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research, said, “On expected lines, the WPI trajectory has continued to be benign at 0.73 percent YoY in December 2023 from 0.26 percent YoY in November 2023. While the slight annualised uptick is on account of the base factor, there is a sequential contraction of 0.9 percent, which is seasonally driven due to the softness in food articles.”
“The wholesale inflation for manufactured goods has persisted to be in the contractionary zone at -0.7 percent YoY and at – percent MoM. It is the tenth successive month that manufacturing inflation has remained in a deflationary mode. Further, the fuel and power category has also exhibited the same trend at – percent YoY and -0.7 percent MoM. This indicates that input costs remain favourable for the industrial segment in the absence of strong global demand.
“In the near term, the deflationary trend in manufactured goods is likely to remain. The overall WPI inflation print is expected to be shaped by the trend in the food category and in the absence of any major surprises, it should remain range-bound between 0 percent and 1.0 percent,” said Chowdhury.
(With inputs from agencies)
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