The uptick marks a return to positive territory for the Wholesale Price Index (WPI) after two months of deflation. WPI inflation had contracted by 0.32 per cent in November and 1.02 per cent in October, reflecting easing input costs and a favourable base effect.
On a year-on-year basis, wholesale inflation remains significantly lower than a year ago, when WPI stood at 2.57 per cent in December 2024, indicating that overall price pressures in the Indian economy are still relatively contained despite the recent rebound.
Economists said the December increase was largely supported by a rise in prices of primary articles, including food items, alongside firming manufacturing costs. The data suggests a gradual recovery in demand conditions, even as global commodity prices remain mixed.
Backgrounder | Indian Economy
The Wholesale Price Index is a crucial barometer of inflation in the Indian economy, tracking price movements at the producer and wholesale level. Compiled by the Office of the Economic Adviser under the Ministry of Commerce and Industry, WPI covers primary articles, fuel and power, and manufactured goods, and is often seen as a leading indicator of future retail price trends.
WPI inflation has been volatile over the past year, influenced by global commodity cycles, domestic supply conditions and food price dynamics. The deflationary phase in October and November was attributed to softer global input prices and base effects, while the recent rebound points to emerging cost pressures in certain sectors.
Analysts caution that if wholesale inflation continues to rise, it could gradually feed into consumer prices, with implications for inflation management and monetary policy. However, with WPI still well below last year’s levels, policymakers are expected to closely monitor whether the current trend reflects a temporary adjustment or a more sustained shift in price dynamics within the Indian economy