WPI Inflation Surges to 2.37% in December 2024 Due to Spike in Manufactured Goods Prices

The Wholesale Price Index (WPI)-based inflation experienced a notable increase, reaching 2.37% in December 2024, up from 1.89% in November. This marks a significant rise from the 0.86% recorded in December 2023. While food inflation showed signs of easing, the surge in prices of manufactured goods contributed to the overall increase in WPI inflation.

Food Inflation: A Mixed Bag

Food inflation eased slightly to 8.47% in December, compared to 8.63% in November. However, this moderation was uneven across categories:

• Vegetables: Inflation rose marginally to 28.65% in December, up from 28.57% in November.
• Potatoes: Prices skyrocketed, with inflation reaching 93.2%.
• Onions: Inflation spiked to 16.81%.
• Cereals, Paddy, Wheat, and Pulses: These staples witnessed a deceleration, with inflation easing to 6.82%, 6.93%, 7.63%, and 5.02%, respectively.
• Milk, Fruits, and Meat: Inflation in these categories rose to 2.26%, 11.16%, and 5.43%, respectively.

Fuel and Power: Continued Deflation

The fuel and power category, accounting for a significant portion of the WPI basket, remained in deflation territory. In December, the category recorded a deflation of 3.79%, an improvement from the steeper deflation of 5.83% observed in November.

Manufactured Products: Key Driver of Inflation

Manufactured products, which hold the highest weightage of 64.2% in the WPI basket, saw inflation increase to 2.14% in December, up from 2% in November. This uptick in manufacturing inflation offset some of the easing observed in the food and fuel categories.

Retail Inflation Eases in December

In contrast to wholesale inflation, retail inflation as measured by the Consumer Price Index (CPI) eased to a four-month low of 5.22% in December. This decline was attributed to lower food prices, providing some relief to consumers.

Conclusion: Divergent Trends in Inflation Components

The December 2024 WPI inflation data highlights a complex interplay of factors. While easing food prices provided some respite, the rise in manufactured goods prices and the volatile trends in specific food categories like potatoes and onions kept wholesale inflation elevated. 

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