The wholesale price inflation in India has been one of the major economic concerns, but in January, it finally eased to 2.31%. While this is great news for the economy, at the same time, the industrial output of December 2024 tanked from 5.2% to 3.2% MoM basis. So, this article will focus on both IIP (Index of Industrial Production) growth rate concerns and India’s wholesale price inflation.
Wholesale Price Inflation
In January 2025, the annual wholesale price inflation finally came down to 2.31% marginally from the previous month’s which is December’s 2.37% wholesale inflation as reported by the Ministry of Commerce and Industry. The declining wholesale inflation is mostly a result of the easing of food prices, which is also dragging the Wholesale Food Index down. The wholesale price index (WPI) stood at 0.33% in January 2024, which indicates a low base, but still then the prices decreased in January 2025.
The food inflation (wholesale) dipped to 5.88% in January 2025 from 8.47% in December 2024 and this sharp decline in the wholesale food prices helped the overall Wholesale Price Index to come down. The vegetable inflation saw the sharpest dip from 28.65% in December 2024 to 8.35% in January 2025.
Within vegetables, not all vegetables witnessed a fall in prices, onions went up to a three-month high in January to 28.3%, and potatoes even worse as the price rose to 74.3%. Having said that, tomato prices helped the vegetable prices overall to ease as they dropped 18.9%.
While food inflation eased in January, the other verticals such as energy, minerals, and non-food articles have risen during the month. Even the non-food articles’ prices increased to a two-year high of 3% in January. The energy and mineral prices also went up by 0.6% YoY during January, after easing consecutively for four months. The worry over new tariffs from the US, and rising temperatures are adding to the woes of the people. Apart from these, the chemical and metal prices also surged which restricted the easing of the Wholesale inflation rate in India to some extent.
IIP Index
The IIP growth rate in December 2024 dropped to 3.2% from 5.2% in November 2024 which has again inflicted worry amongst investors and the economy. The core sector’s output that is of Mining, Electricity, and manufacturing stood at 2.6%, 6.2%, and 3% respectively.
Wrapping up
So, while inflation has been seen to be easing in January, the IIP Index seems to have declined in December 2024 and has been a concern as it indicates towards slowing down in the core sectors. Having said that, the higher prices were also a challenge for the industries to perform at their best, and now with the prices easing, the industrial output can also rise.
Source: DH
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