Wholesale inflation eased to 4.7% in January

Base effects drive eighth successive month of moderation in wholesale prices, but food inflation resurges — led by pricier cereals and milk

India’s wholesale price inflation cooled further in January to a two-year low of 4.73% from 4.95% in December, thanks to a slight decline in manufactured products’ price rise as well as fuel and power inflation, even as the pace of inflation in food and primary articles hardened sequentially.

January marks the eighth successive month of sequential moderation in the wholesale inflation, since it peaked at 16.63% in May 2022. The moderation was helped in no small measure by base effects as January 2022 had recorded a 13.7% surge in wholesale prices.

Cereals inflation at the wholesale level sped to the highest level in nine and a half years to hit 15.5% in January, with paddy inflation at 7.2% and wheat price rise at 23.6% (up from 20.7% in December 2022).

Fuel and power inflation eased from 18.1% in December to the lowest level in 22 months at 15.2%, while manufactured products inflation eased marginally from 3.4% to 3% over the same time frame.

“Within manufacturing, cement has registered high increase of around 8.4% which will add to building costs and can affect the real estate sector. These costs could ease with fuel prices coming down,” said Bank of Baroda chief economist Madan Sabnavis, who expects wholesale inflation to dip further to end up around 4% by March.

“Decline in the rate of inflation in January, 2023 is primarily contributed by mineral oils, chemicals & chemical products, textiles, crude petroleum & natural gas, textiles, and food products,” the Ministry said.

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