A poll by Reuters had indicated India’s WPI to be at 2.3 per cent.
India’s retail inflation eased to 5.22 per cent in December from 5.48 in November. Inflation breached the RBI’s 6 per cent upper tolerance band in October.
The WPI measures the price of a representative basket of wholesale goods. In India, wholesale price index is divided into three groups: Primary Articles (22.6 percent of total weight); Fuel and Power (13.2 percent); and Manufactured Products (64.2 percent).
As a significant portion of 1.4 billion people spend most of their income on food, India’s inflation index is heavily influenced by food prices. Experts had earlier indicated that a higher food inflation number could keep overall inflation from declining significantly.
RBI on inflation
RBI’s Monetary Policy Committee (MPC) in December downgraded its growth forecast for this fiscal year to 6.6% from 7.2%, while increasing its inflation estimates to 4.8% from 4.5% for the same period, highlighting concerns over food inflation.The MPC retained its neutral stance, signalling room for potential rate cuts if inflationary pressures ease in the coming months.Food inflation is expected to remain elevated through the third quarter of FY25 before showing signs of moderation in the fourth quarter, former RBI Governor Shaktikanta Das said in his statement during the MPC meeting. “High inflation reduces the disposable income in the hands of consumers,” he added.
Das noted that increasing incidents of weather events, financial volatility and geopolitical developments pose upside risks to inflation.
Content Source: economictimes.indiatimes.com