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WPI inflation stood at 2.3% in Jan’25

Food prices decelerated, led by vegetables

* The Wholesale Price Index (WPI)-based inflation stood at 2.3% YoY in Jan’25, slightly lower than 2.4% in Dec’24, but higher than 0.3% in Jan’24. The deceleration was led by a decrease in food inflation (especially vegetables), which was partly offset by a slower pace of contraction in prices of fuel & power items (the slowest contraction in the past five months) and the 24-month highest increase in prices of manufacturing products. WPI-based inflation remained positive for the 13th consecutive month after having been in the deflationary zone for the majority of the previous financial year (Exhibit 1). Sequentially, WPI dipped 0.5% in Jan’25, similar to Dec’24.

* The deceleration in WPI was primarily driven by a decrease in food inflation (7.4% YoY in Jan’25, lowest in five months). WPI, excluding food, increased 0.3% in Jan’25 vs. a contraction of 0.3% in Dec’24 (Exhibit 2). Within the food category, prices of primary food articles increased at a slower pace of 5.9% in Jan’25 vs. 8.5% in Dec’24 (the lowest in five months), while prices of manufactured food products increased at a 34-month high pace of 10.4% in Jan’25 vs. 9.7% in Dec’24. Within the primary food articles category, lower food inflation was driven by a deceleration in vegetable price growth.

* On the other hand, WPI for fuel and power contracted 2.8% in Jan’25 (the lowest contraction in five months), following a contraction of 3.8% in Dec’24. At the same time, prices of manufacturing products increased at a 24-month high pace of 2.5% in Jan’25.

* WPI for non-food manufacturing products increased 0.9% in Jan’25 (vs. 0.7% in Dec’24, the highest in six months), led by a rise in the prices of leather products, chemical products, basic chemicals, fertilizers, pharmaceuticals, and computer & electronic products.

* Agro inflation came down to a five-month low of 5.3% in Jan’25 from 7.4% in Dec’24. Simultaneously, agro-input prices contracted 0.9% YoY in Jan’25 (a slower contraction than the last month) vs. a contraction of 1.6% YoY in Dec’24. Consequently, the agricultural terms of trade growth decelerated to 6.3% in Jan’25 (vs. 9.1% in Dec’24, the lowest in five months; Exhibit 4). Prices of imported items increased to a six-month high of 1.8% in Jan’25 (1.0% in Dec’24). Additionally, non-agro domestic inflation rose 0.9% YoY in Jan’25 (vs. +0.7% in Dec’24; Exhibit 3).

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