India’s wholesale inflation climbed to a 10-month high in January, signalling rising price pressures at the producer level, even as policymakers remain focused primarily on retail inflation.
Government data released on February 16 showed that the Wholesale Price Index (WPI) rose 1.81 percent year-on-year in January, compared with 0.83 percent in December. The latest print is the highest since March 2025, when WPI inflation stood at 2.25 percent.
Economists had expected a more moderate increase of around 1.25 percent.
The pick-up in wholesale inflation was led by food items and manufactured products, particularly basic metals.
Key contributors included:
Higher prices of vegetables
Increased costs of basic metals
Rising prices of textiles
Firm manufacturing costs
A global rally in metal prices, driven by economic and political developments, has pushed up input costs for manufacturers. This has fed into higher wholesale prices.
Wholesale inflation (WPI): 1.81 percent in January (0.83 percent in December)
Food inflation (wholesale): 1.41 percent (flat in December)
Vegetable prices: up 6.78 percent (down 3.5 percent in December)
Manufactured products: up 2.86 percent (1.82 percent in December)
Fuel and power: down 4.01 percent (down 2.31 percent in December)
The sharp turnaround in vegetable prices played a significant role in lifting overall food inflation at the wholesale level.
While the Reserve Bank of India primarily targets retail inflation measured by the Consumer Price Index, wholesale inflation is an important early indicator of price trends in the economy.
Its significance lies in:
Capturing price movements at the producer and bulk trade level
Reflecting input cost pressures for manufacturers
Signalling potential pass-through to retail prices
Indicating trends in industrial demand and supply conditions
If wholesale inflation remains elevated for a sustained period, producers may pass on higher input costs to consumers, pushing up retail inflation later.
At present, however, economists believe the latest WPI print is unlikely to alter monetary policy expectations, as retail inflation remains the central bank’s key focus.
The rebound in wholesale inflation suggests that input cost pressures are resurfacing, particularly in metals and food. The continued decline in fuel and power prices, however, has helped limit the overall rise.
For businesses, rising wholesale prices mean tighter margins unless higher costs are passed on. For policymakers, it serves as a cautionary signal that price pressures at the production level are building, even if retail inflation remains relatively contained.
If food and metal prices stay firm in the coming months, wholesale inflation could remain elevated, increasing the risk of a broader inflationary spillover.
