Wholesale inflation climbs to eight-month high of 0.83% in December

India's wholesale price inflation rose to an eight-month high of 0.83 per cent in December, ending a two-month deflationary spell as food prices stabilised and core inflation firmed up

India’s factory-gate inflation, as measured by the wholesale price index (WPI), climbed to an eight-month high of 0.83 per cent in December snapping a two-month deflationary streak, according to data released by the Ministry of Commerce and Industry on Wednesday.

 

The hardening in wholesale inflation was primarily propelled by reversal of contraction in food prices, as food inflation stabilised at 0 per cent in December as against -2.6 per cent in November.

 

This comes after India’s retail inflation firmed up to a three-month high of 1.33 per cent in December, up from 0.71 per cent in November, on the back of narrowing food price deflation and waning favourable base effects.

 

According to the WPI data, primary food articles saw a deflation of -0.43 per cent in December compared to -4.16 per cent in November, led by the narrowing of deflation for vegetables (-3.5 per cent), cereals (-1.18 per cent), pulses (-13.88 per cent), and onions (-54.40 per cent) in December relative to the preceding month.

 

Moreover, paddy (0.15 per cent) and fruits (1.97 per cent) exhibited inflationary pressures in December, contrasting with price declines in November.

 

Core inflation, which excluded the volatile food and fuel items, rose to a 34-month high of 2 per cent in December from 1.5 per cent in the previous month.

 

“In sequential terms, the core index rose by 0.5 per cent in December 2025, the steepest uptick in 19 months, reflecting hardening global commodity prices and the depreciation in the USD/INR pair over the past few months, which is likely to have put pressure on the landed cost of imports,” added Rahul Agrawal, senior economist at ICRA.

 

Icra expects the WPI-food inflation to harden further in January 2026 and continue on an upward trajectory thereafter owing to an unfavourable base and the year-on-year WPI inflation to rise to 1.5 per cent in January 2026.

 

“Looking ahead, robust agricultural activity, favourable base effect, and adequate reservoir levels are expected to help contain food price pressures,” noted Rajani Sinha, chief economist at CareEdge Ratings.

 

The agency expects WPI inflation to edge up marginally due to the low base of last year, however, averaging around 0.4 per cent in FY26.

 

Agarwal said global commodity prices have continued to rise on a sequential basis in January 2026 led by sharp gains in precious metals, as well as some hardening in prices of some industrial metals, even though oil prices have cooled.

 

Inflation in manufactured products -- that carries a weight of over 64 per cent in the index -- climbed to a three- month high

 

of 1.82 per cent in December, up from a 14-month low of 1.33 per cent in November.

 

Fuel and power group remained in deflationary territory for the ninth consecutive month at 2.31 per cent.

 

On the external front, Sinha said that global commodity prices have remained broadly stable, supported by oversupply in the global crude oil market and persistent overcapacity in China.

 

“Opec’s production policies and elevated inventory levels are expected to cap any significant upside in crude oil prices. Recent tensions in Venezuela are unlikely to have a material impact on oil markets, given the country’s limited share in global production. Nonetheless, geopolitical risks -- particularly in West Asia -- warrant close monitoring due to their potential implications for energy prices,” she added.