India’s Wholesale Inflation Rises to 1.81% in January as Food & Manufacturing Costs Climb

India’s wholesale inflation rose sharply in January, nearly doubling to 1.81% from 0.83% in the previous month. The increase was largely driven by higher food prices, particularly vegetables, and rising costs in the manufacturing sector, even as key kitchen staples like potatoes and onions remained significantly cheaper compared to last year.

India’s January Wholesale Inflation Reaches 1.81% as Food and Manufacturing Costs Rise

India's wholesale price-based inflation experienced an uptick in January, reaching 1.81% compared to 0.83% in the previous month. This rise was primarily driven by a surge in food prices and increased costs within the manufacturing sector.

The latest Wholesale Price Index (WPI) data indicates strengthening price pressures across key categories, although some essential food items continued to offer relief to consumers.

Core Inflation Shows Sharp Monthly Increase

Core inflation was at 3.2% month-on-month, up from 2%. This indicates that price pressures are not limited to food items alone, but are also visible across manufactured goods and other non-volatile components.

A rise in core inflation is closely watched by policymakers, as it reflects underlying demand and cost dynamics within the economy.

Food Inflation Rebounds in January

Vegetable Prices Jump 6.78%

Food inflation climbed to 1.41%, compared with the 0% recorded in the prior month.

The increase was largely fueled by vegetables, which jumped to 6.78%.

Additionally, price growth for eggs, meat, and fish tripled to 3.66%, up from 1.14%.

The rebound in food prices comes after a relatively stable phase in previous months and reflects seasonal supply fluctuations and higher input costs.

Relief in Key Kitchen Staples

Despite the overall rise in food inflation, some essential kitchen items remained significantly cheaper compared to last year.

• Potato inflation stood at -38.84%, showing little change from the previous month's -38.21%.

• Onion prices also remained at -33.42%, from the -54.40% seen previously.

These negative inflation readings indicate that prices of these items are still substantially lower than the same period last year, providing partial relief to households.

Diverging Trends Across Industrial and Commodity Sectors

The broader industrial and commodity sectors displayed mixed trends in January.

• The All Commodities Index has increased by 0.51%.

• The Primary Articles Index has decreased by 0.15%.

• The Fuel and Power Index has dropped by 1.62%.

• The Manufactured Products Index has risen by 1.30%.

The decline in the Fuel and Power Index suggests easing energy-related cost pressures at the wholesale level, while the rise in manufactured products indicates increasing production and input costs.

What the Data Signals for the Economy

The uptick in wholesale inflation suggests rising cost pressures in certain sectors, especially food and manufacturing. However, continued softness in fuel prices and negative inflation in select vegetables indicate that inflationary pressures remain uneven.

Wholesale inflation trends are significant because they often feed into retail inflation over time, influencing consumer prices and monetary policy decisions.