India’s wholesale inflation softens for second straight month in January, retail inflation rises

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New Delhi : Wholesale price index (WPI)-based wholesale inflation in India has remained moderate and softened to 4.73 per cent in January, the starting month of 2023, which is slightly higher than the level set by the Reserve Bank of India (RBI). The Reserve Bank is continuously increasing the repo rate to limit inflation to 4 percent. However, in the month of December, the wholesale inflation was soft at 4.95 percent as compared to November.

According to data released by the government, the index for the fuel and power segment (with an overall weighting of 13.15 per cent) declined by 1.39 per cent to stand at 155.8 per cent in January. The overall wholesale inflation rate was 8.39 per cent in October and since then it has been registering a steady decline. Notably, wholesale inflation based on the Wholesale Price Index (WPI) remained in double digits for 18 consecutive months till September.

Meanwhile, Consumer Price Index (CPI)-based retail inflation crossed the psychological level of the reserve to reach 6.52 per cent in January 2023 again. According to the data released by the government on Monday, retail inflation in rural and urban India was 6.85 per cent and 6.00 per cent respectively. Prices of cereals and products segment, eggs, spices, etc contributed to the rise in retail inflation in January. India’s retail inflation was above the Reserve Bank’s target of six per cent for three consecutive quarters.

On the other hand, in order to reduce inflation, RBI has increased the repo rate almost 6 times continuously since May last year. Recently, RBI has increased the repo rate by 0.25 percent. With this, between May 2022 and February 2023, the repo rate has increased to a level of about 6.5 percent.

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