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Below the Perspective on the WPI Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings

“WPI inflation increased to 0.8% in December, reversing the deflation of 0.3% recorded in November. This uptick was primarily driven by a moderation in food price deflation and higher inflation in manufactured products. Looking ahead, robust agricultural activity, favourable base effect, and adequate reservoir levels are expected to help contain food price pressures. Deflation in the fuel and power category remained unchanged at 2.3%. Overall, WPI inflation continues to remain at comfortable levels.

 Globally, commodity prices have remained broadly stable, supported by oversupply in the global crude oil market and persistent overcapacity in China. The global crude oil supply glut is likely to persist through CY2026, with production continuing to exceed consumption. OPEC’s production policies and elevated inventory levels are expected to cap any significant upside in crude oil prices. Recent tensions in Venezuela are unlikely to have a material impact on oil markets, given the country’s limited share in global production. Nonetheless, geopolitical risks—particularly in the Middle East—warrant close monitoring due to their potential implications for energy prices. Though, prices of several base metals, including copper and aluminum, have risen sharply in the recent past, driven by strong industrial demand from renewable energy and AI-related sectors, US Federal Reserve rate cuts, and expectations of fiscal stimulus in China, we do not see that as a major concern for domestic inflationary situation.

 Going forward, WPI inflation is expected to edge up marginally due to low base of last year. However, it would remain largely benign, averaging around 0.4% in FY26.”

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