Wholesale price inflation eases to 2.31% in January on lower food prices

Wholesale price inflation in India moderated to 2.31% in January 2025, down from 2.37% in December 2024, driven by a decline in food prices, particularly vegetables, according to government data released on Friday.

As per government data, wholesale Inflation in food items eased to 5.88% in January from 8.47% in December. A notable drop was observed in vegetable inflation, which fell to 8.35% from 28.65% in the previous month. However, inflation in potatoes remained significantly high at 74.28%, while onion prices surged by 28.33%. Cereal prices rose 7.33% in January compared to a 6.82% rise a month ago.

The annual rate of inflation, based on the WPI Food Index, decreased from 8.89% in December 2024 to 7.47% in January 2025.

Fuel and power prices continued to experience deflation, declining 2.78% in January compared to a 3.79% drop in December. Meanwhile, inflation in manufactured goods, which account for around 64% of the Wholesale Price Index (WPI), rose to 2.51% from 2.14% in December.

Retail inflation data released earlier this week also showed a similar trend. Due to easing food prices, Consumer Price Index (CPI) based inflation eased to a five-month low of 4.31% in January.

India's headline inflation cooling down has raised expectations of further monetary policy adjustments. The Reserve Bank of India (RBI) recently cut its key interest rate for the first time in nearly five years to support economic growth, following inflation easing towards its 4% target. The central bank projects inflation to average 4.8% in the current financial year, with expectations of it easing further to 4.2% next year.

However, the RBI remains cautious, noting that while food inflation pressures may subside, volatile global energy prices pose a potential risk to the inflation outlook.