WPI inflation rises to 2.38% in Feb from 2.31% in Jan on fuel and power

India’s wholesale price index (WPI)-based inflation in February 2025 rose to 2.38 per cent, primarily due to an increase in fuel and power prices along with higher costs in the manufacturing sector, according to data released by the Ministry of Commerce and Industry on Monday. This is higher than the WPI rate in January which stood at 2.31 per cent. 

  

The fuel and power index increased by 2.12 per cent to 153.8 (provisional) in February from 150.6 (provisional) for the month of January. This was driven by a 4.28 per cent increase in electricity prices and a 1.87 per cent rise in mineral oil prices.  The index for manufactured products increased by 0.42 per cent, with notable price hikes in the manufacture of food products, basic metals, non-metallic mineral products, and chemicals.  However, the WPI Food Index, which includes food articles and manufactured food products, declined to 5.94 per cent in January from 7.47 per cent in February, partially offsetting the overall inflation rise.  The month-on-month change in WPI for February stood at 0.06 per cent.

 

Retail inflation falls below 4 per cent

 

India's Consumer Price Index (CPI) inflation rate for February 2025 was 3.61 per cent, marking the first time in six months that it fell below the Reserve Bank of India's (RBIs) target of 4 per cent. This decline was primarily driven by a sharp reduction in food prices, with food inflation decreasing to 3.75 per cent in February from 5.97 per cent in January. 

 

The Index of Industrial Production (IIP), which measures the country's industrial output, grew by 5 per cent in January 2025, up from 3.2 per cent in December 2024. The growth was driven by robust performances in the manufacturing and mining sectors.

 

While both WPI and CPI measure inflation, they differ in scope and methodology. WPI tracks price changes at the wholesale level, covering goods traded between businesses, excluding services. It focuses more on manufactured products, fuel, and primary articles. Whereas CPI measures retail-level price changes, reflecting costs consumers pay for a basket of goods and services, including food, housing, education, and healthcare.

 

Rate cuts expected in RBI MPC

 

The RBI's next Monetary Policy Committee (MPC) meeting is scheduled from April 7 to 9, 2025. In the previous MPC meeting held in February, the committee reduced the benchmark repo rate by 25 basis points, bringing it down to 6.25 per cent from 6.5 per cent. This marked the first rate cut in nearly five years and was aimed at easing monetary conditions to support economic growth.

 

After the CPI inflation eased to a seven-month low in February, the market expects further rate cuts by the central bank.