India's wholesale inflation climbs to 10-month high of 1.8 % in January

Wholesale inflation rose to a 10-month high of 1.81% in January, driven by higher food and core prices, with vegetable inflation turning positive and manufactured goods showing renewed price pressures

India’s factory-gate inflation, measured by the wholesale price index (WPI), rose to a 10-month high of 1.81 per cent in January, driven by a pickup in food prices and higher core inflation, data released by the Ministry of Commerce and Industry showed on Monday.

 

After remaining flat year-on-year in December 2025, food inflation climbed to an eight-month high of 1.4 per cent in January. The rise was accompanied by a sharp increase in core inflation (excluding volatile food and fuel), which surged to a 38-month high of 3.2 per cent from 2 per cent in the previous month.

 

“The hardening in global commodity prices and depreciation in the dollar/rupee pair over the past few months is likely to have put upward pressure on the core index, which rose 1.4 per cent sequentially in January 2026 – the sharpest uptick in 45 months,” said Rahul Agrawal, senior economist at Icra.

 

 

This comes after retail inflation, under the new 2024 base year series, stood at 2.75 per cent in January, while the consumer food price index was pegged at 2.13 per cent.

 

According to WPI data, primary food articles inflation stood at 1.55 per cent in December, ending an eight-month contractionary streak. This was led by price rises in vegetables (6.78 per cent) and widening inflation in paddy (0.89 per cent) and eggs, meat and fish (3.66 per cent) in January compared to the preceding month.

 

Vegetable inflation turned positive in January after nearly a year in deflation, with prices last recording an increase in January 2025 at 8.11 per cent. Madan Sabnavis, chief economist at Bank of Baroda, attributed the rise to supply shortfalls and base effects.

 

Pulses (-11.05 per cent) and onion (-33.42 per cent) saw narrowing deflation compared to the previous month.

Icra expects WPI food inflation to harden further as unfavourable base effects intensify. Rising global commodity prices and the lagged impact of dollar/rupee depreciation are also likely to keep import costs elevated.

 

Overall, the agency expects WPI inflation to inch up to around 2.0–2.2 per cent in February 2026.

 

Inflation in manufactured products – which carry a weight of over 64 per cent in the index – climbed to a 10-month high of 2.86 per cent in January from 1.82 per cent in December. Sabnavis attributed this largely to a rise in metal prices of around 6 per cent. “This reflects global developments, as there has been a rally in this segment amid the economic and political situation,” he said.

 

The fuel and power group remained in deflation for the tenth consecutive month at 4 per cent.

 

Sabnavis said the WPI print is unlikely to influence monetary policy but indicates benign cost conditions from a corporate standpoint. “If the lower customs duty rates for several commodities are factored in, there will be a downward tendency in prices of manufactured products next year,” he added.

 

With no timeline yet for the rollout of a new WPI series, Sabnavis noted that the upcoming GDP series (base year 2022-23) will continue to rely on the existing WPI (base 2011-12) as deflators for various segments of the national accounts.