India's wholesale price inflation eases to two-year low of 4.73% in January

The price fall is mainly attributed to a fall in food prices, especially vegetables

India's annual Wholesale Price-based Inflation (WPI) eased to 4.73 per cent year-on-year (YoY) in January, the eighth straight month of decline. This is the lowest figure in 24 months. 

In December 2022, the WPI-based inflation was 4.95 per cent and in November, it was 6.12 per cent. 

Inflation in food articles, however, rose to 2.38 per cent in January, from (-) 1.25 per cent in December, 2022.

"Decline in the rate of inflation in January, 2023 is primarily contributed by mineral oils, chemicals and chemical products, textiles, crude petroleum & natural gas, textiles, and food products," the release issued by the commerce ministry said.  

Inflation in pulses was 2.41 per cent, while in vegetables was (-) 26.48 per cent. Inflation in oil seeds was (-) 4.22 per cent in January.

Fuel and power basket inflation eased to 15.15 per cent, from 18.09 per cent in December 2022. In Manufactured products it was 2.99 per cent, against 3.37 per cent in December, 2022.

The deceleration in WPI comes in contrast to the retail inflation data released on Monday which showed consumer price index (CPI) or retail inflation rose to 6.52 per cent in January, from 5.72 per cent in December 2022.

In its monetary policy review last week, the RBI had hiked policy rates by 25 basis points to 6.50 per cent saying core inflation still remains sticky.

Consumer price index-based inflation had moved below the upper tolerance level of 6 per cent during November-December 2022, driven by a strong decline in prices of vegetables.

Assuming an average crude oil price (Indian basket) of USD 95 per barrel, RBI bettered inflation projection for current fiscal to 6.5 per cent in 2022-23, from 6.8 per cent predicted earlier. 

In the January-March quarter, the RBI expects retail inflation to average at 5.7 per cent.

The reading was higher than the Reuters' forecast of 4.54 per cent.

(With agency inputs)