India's wholesale inflation rises to 1.81% in January

New Delhi: Inflation measured by the wholesale price index (WPI) rose to 1.81% in January, after remaining muted in the last six months, primarily due to an increase in prices of basic metals and other manufactured food and non-food articles and textiles, official data released by the commerce ministry showed on Monday.

Wholesale price inflation was at 2.51% in January 2025. Since July last year, muted wholesale price situation had resulted in either deflation or less than 1% inflation.

WPI inflation was at 0.83% for December, after two consecutive months of deflation in October and November.

Inflation in primary articles comprising food items like cereals, paddy, wheat, vegetables, milk, eggs, meat and fish as well as minerals and crude oil, stood at 2.21% in January, slowing down from the 4.58% surge seen in January 2025.

Primary articles have a weight of about 23% in the index. This segment had seen inflation of 0.21% in December 2025.

Inflation in manufactured products, the largest group in the index, with a weight of over 64%, stood at 2.86% in January, up from 2.65% in the same period a year ago and 1.82% in December.

Deflation in fuel and power category, comprising cooking gas, petrol and diesel, continued in January at 4%, compared to a deflation of in the same period a year ago and of 2.31% in December. Softer global energy prices and moderate electricity tariffs kept prices lower.

RBI focuses on retail price inflation measured by the consumer price index (CPI) for monetary policy decisions, but inflation measured by the wholesale price index remaining benign would indicate that cost pressures for businesses remain under control, helping stabilise retail prices.

RBI said earlier this month that food supply prospects remain bright on the back of healthy kharif production, sufficient buffer stocks of foodgrains, favourable rabi sowing and adequate reservoir levels. Geopolitical uncertainty coupled with volatility in energy prices and adverse weather events pose upside risks to inflation, the central bank said on 6 February when it held its repo rate steady at 5.25%.

The WPI inflation numbers will not have a bearing on monetary policy but is still indicative of benign prices from a corporate standpoint where costs will be under control, said Madan Sabnavis, chief economist, Bank of Baroda.

“If the lower customs duty rates for several commodities are considered, there will be downward tendency for prices of manufactured products which are important dependent next year,” said Sabnavis. As the date for announcement of a new WPI series is not yet indicated, it would mean that the new GDP series expected later this month would still use the existing WPI as deflators for various segments, said Sabnavis.

The government is currently working on revising the WPI base year from 2011-12 to 2022-23 to reflect the structural changes in the economy over the years. A committee led by Niti Aayog member Ramesh Chand is advising the government on this. A more accurate measure of inflation will help in assessing real GDP in a better way.

The government is also exploring a transition from WPI, which covers goods but not services, to a more comprehensive producer price index (PPI) that can track services given that services now account for more than half of India’s economic output.