Based on the Wholesale Price Index (WPI), producer inflation fell to a 22-month low in December. WPI-based inflation decreased from 5.85 percent in November to 4.95 percent in December, primarily as a result of lower prices for food items and crude oil. The Monetary Policy Committee is anticipated to face pressure to postpone the increase in policy interest rates as a result of lower wholesale and consumer inflation prints. The CPI is currently above the RBI’s median goal range for inflation of 4 percent, so economists still expect at least a 25 basis point increase in February.
WPI-based inflation fell to 4.95 percent in December from 5.85 percent in November, according to figures issued by the Commerce and Industry Ministry. This decrease was mostly caused by lower prices for food items and crude oil. According to a statement released by the Ministry, “the drop in the rate of inflation in December is principally due to fall in the prices of food articles, mineral oils, crude petroleum & natural gas, food goods, textiles, and chemicals & chemical products.”
A different report from India Ratings & Research (Ind-Ra Paras )’s Jasrai and Sunil Kumar Sinha claims that decreasing input prices, particularly for commodities, caused core inflation to fall to a 25-month low of 3.2% in December. “IndRa believes the whole-sale inflation is projected to come in around 3.1% in 4QFY23 due to the high base effect and easing of global commodity prices,” it added.
