January WPI inflation falls to 6-month low of 2.84%, in line with CPI data

Every category in food items, barring milk, saw moderation in inflation or continued price fall

The Wholesale Price Index (WPI)-based inflation rate fell — in step with the consumer price inflation (CPI) rate — to a six-month low of 2.84 per cent in January, from 3.58 per cent in December, on the back of lower increases in the prices of food and petroleum.

The CPI-based inflation rate came down in January to 5.07 per cent, from 5.21 per cent in December. While both are down, the moderation in the latter was sharper. 

This, along with the expected rise in the CPI inflation rate from the first quarter of the next financial year, shows that the gap between the two might widen in coming months, according to Icra Principal Economist Aditi Nayar. 

While the CPI rate rose in December from 4.88 per cent in November, the WPI rate fell from 4.02 per cent.

The WPI food inflation rate decreased to a four-month low of 3 per cent in January, from 4.72 per cent in the previous month. 

However, the rate for vegetables continued to remain elevated in January even as it fell to 40.77 per cent from 56.46 per cent in December. 

The rise in onion prices also moderated, but was still high at 193.89 per cent in January, against 197.05 per cent in December.

Every category of food items, barring milk, saw moderation in price rise, or price fall. The rise in the case of milk prices went up to 3.93 per cent in January, compared to 3.85 per cent in December. 

Prices of wheat and pulses increased at lower rates.

The rate for fuel items halved to 4.08 per cent in January, against 9.16 per cent in December. 

It was only manufacturing that saw a rise in the inflation rate to 2.78 per cent, from 2.61 per cent in this period. 

This led to an increase in the core inflation rate (in manufactured items except food products), widely tracked by policymakers. It rose to 3.4 per cent in January, from 3.1 per cent in the previous month.

“Higher commodity prices and a seasonal reset of prices at the beginning of the year resulted in a considerable uptick in core inflation,” Nayar said.