Thursday, 16 May, 2024
By: Yash Gupte
The WPI was recorded at 14.27 percent in December 2021. Image Source: IANS
The fuel and power inflation inched up due to an uptick in electricity inflation. Core inflation, on the other hand, decreased as input costs, particularly for commodities, fell to a 25-month low of 3.2 percent
As per the press release by the Ministry of Commerce and Industry, Index wholesale price index-based inflation dropped to 4.95 percent in December from 5.85 percent in November. According to the commerce ministry, “The decline in the rate of inflation in December 2022 is primarily contributed by fall in prices of food articles, mineral oils, crude petroleum & natural gas, food products, textiles and chemicals & chemical products.” The drop in the WPI can be considered as a significant as the wholesale price index has dropped to 22 month low in December 2022.
The WPI was recorded at 14.27 percent in December 2021. Although the category of food articles experienced negative inflation in December 2022, analysts highlight new food-related concerns, such as cereals experiencing double-digit inflation for the fifth consecutive month. The fuel and power inflation inched up due to an uptick in electricity inflation. Core inflation, on the other hand, decreased as input costs, particularly for commodities, fell to a 25-month low of 3.2 percent.
Food inflation decreased from 2.17 percent in November to 0.65 percent in December. The segment's inflation rate for primary articles was 2.38 percent, down from 5.52 percent the month prior. Wholesale inflation for natural gas and crude oil decreased to 39.71 percent in December. Its value in November was 48.23 percent. Inflation for fuel and electricity increased to 18.09 percent from 17.35 percent in November.
The chart below shows the wholesale inflation in India in 2022.
The wholesale inflation in India peaked in the month of May at 16.63 percent and later recorded a downward trend. The WPI gradually dropped to 16.23 percent in June and it further dropped to 8.67 percent in October. According to India Ratings and Research, the wholesale inflation is expected to drop to 3.1 percent in the fourth quarter of FY 2023 due to high base effect and softening of global commodity prices.
The drop in WPI echoes the economic conditions in the country. Just like WPI, consumer price index also registered a steep decline from record 7.4 percent in September to 5.72 in December. The consumer sentiment index is also a record high.
