.jpg?width=1200)
Wholesale Price Index (WPI) inflation in January 2025 declined to 2.31 per cent, down from 2.37 per cent in December 2024. The drop was mainly driven by a sharp decline in food prices, particularly vegetables, and easing fuel costs. However, inflation in key essential commodities like potatoes and onions remained high, continuing to impact household budgets.
On the retail front, Consumer Price Index (CPI) inflation also softened, coming down to 4.31 per cent—the lowest in five months.
Food Inflation Cools Down
One of the major contributors to the decline in wholesale inflation was the significant easing of food prices. Food inflation in January stood at 5.88%, a sharp decline from 8.47 per cent in December. Vegetable inflation saw an even steeper fall—from a staggering 28.65 per cent in December to just 8.35 per cent in January.
This drop indicates a stabilization in vegetable prices, bringing much-needed relief to consumers. The supply of fresh produce has improved, leading to lower market prices, which in turn has contributed to the easing WPI inflation.
Potatoes and Onions Still Pricey
Despite the overall downward trend in food prices, potatoes and onions continue to remain costly. Potato inflation surged to 74.28 per cent, showing no signs of immediate relief. Similarly, onion prices soared, with inflation rising to 28.33 per cent in January.
The spike in these essential commodities is attributed to supply constraints, weather disruptions, and logistical challenges, which have kept prices elevated.
Fuel and Power Prices Decline
Another factor contributing to the fall in WPI inflation is the decline in fuel and electricity costs. Inflation in this category stood at 2.78 per cent in January, a drop from 3.79 per cent in December.
A decrease in global crude oil prices and stable domestic energy costs helped ease inflationary pressures in this sector. The lower energy costs are expected to benefit both industries and consumers by reducing input costs and household energy expenses.
The inflation rate in this segment rose from 2.14 per cent in December to 2.51 per cent in January. | Representational Image/Pixabay
Manufactured Goods Inflation Sees a Slight Rise
While food and fuel inflation witnessed a decline, inflation in manufactured goods saw a modest increase. The inflation rate in this segment rose from 2.14 per cent in December to 2.51 per cent in January.
This suggests a slight rise in production costs, which could translate into increased prices for consumer goods in the coming months.
Retail Inflation at a Five-Month Low
On the retail front, CPI-based inflation eased to 4.31 per cent in January, marking its lowest level in the past five months. This indicates a broader trend of price stabilization, particularly in food items. If this trend continues, consumer purchasing power may improve, boosting overall economic sentiment.
What’s Next?
Experts believe that if the current trend of declining inflation persists, consumers can expect further relief. However, persistent price hikes in essential items like potatoes and onions remain a concern. To sustain lower inflation levels, policymakers may need to focus on improving supply chains and addressing seasonal disruptions in the food supply.
The coming months will be crucial in determining whether inflationary pressures remain in check or if price fluctuations in essential commodities lead to renewed concerns for both consumers and businesses.
