The month-on-month change in WPI index for January witnessed an increase of 0.13 per cent as against a contraction of 1.12 per cent in the preceding month.
The latest WPI number could be favourable for corporates as a dip in wholesale prices might ease pressure on corporate earnings. Lower input costs might also bode well for retail prices.
“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,” stated the release.
The WPI inflation had eased to a 22-month low of 4.95 per cent in December, due to fall in prices of food articles, mineral oils, crude petroleum & natural gas, food products, textiles and chemicals & chemical products. The WPI inflation has been decreasing for the past several months.
The WPI is one of the two indices that measure inflation in India. The other is Consumer Price Inflation (CPI). The WPI captures prices at the level of production or manufacturing, taking into account goods traded between companies, as against the CPI that measures prices at the retail consumer level. Food items, which constitute a major part of the CPI, drive retail inflation, while for the WPI, it’s manufactured goods.
Yesterday, the data showed an unexpected uptick in the CPI inflation for January. It surged to a three-month high of 5.6 per cent. The spurt in retail inflation in January indicated the RBI might continue with rate hikes while the downtrend in retail inflation in previous months had raised hopes the RBI would go soft on rate hikes. Rising inflation has posed a challenge for central banks around the world which have been tightening lending rates to control it.The WPI Inflation for food articles in January surged to 2.38 per cent from 0.65 per cent in December. For the primary articles segment, the inflation rate recorded a growth of 3.88 per cent.
Wholesale inflation in crude petroleum and natural gas eased to 23.79 per cent from 39.71 per cent in December. Fuel and power inflation surged to 15.15 per cent from 18.09 per cent in December. Inflation for manufactured products came in at 2.99 per cent in January.
In May last year, the WPI had climbed by 15.88 per cent, the highest since September 1991, due to rising prices for crude petroleum and natural gas, food items, basic metals and chemical products.