WPI inflation hits nine-month high at 1.81% in January as metal, food prices rise

India’s wholesale price inflation (WPI) climbed to a nine-month high of 1.81 per cent in January, up sharply from 0.83 per cent in December, government data released on Monday showed. The rise marks a clear reversal from the subdued price pressures seen late last year.

The rise in wholesale inflation was mainly driven by increase in prices of manufactured products, that included basic metals, textiles, and other industrial goods, along with firmer prices of non-food articles and food items.

Food inflation also rises

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Food inflation that the WPI basket rose to 1.41 per cent in January after remaining flat at 0.00 per cent in December indicative of a rebound in prices of several kitchen staples.

Primary articles inflation increased to 2.21 per cent from 0.21 per cent in the previous month, highlighting broader price pressures across agricultural commodities.

Fuel inflation remains in contraction

In contrast, fuel and power inflation stayed in negative territory, contracting 4.01 per cent in January, compared with a 2.31 per cent contraction in December, providing some relief on the cost front.

Meanwhile, manufactured products inflation inched up to 2.86 per cent from 1.82 per cent, underscoring rising input costs for industry. On a month-on-month basis, WPI rose 0.51 per cent in January.

Kitchen staples show mixed trend

Vegetable prices rebounded sharply, rising 6.78 per cent year-on-year in January, compared with a 3.50 per cent contraction in December. Onion prices remained in deflation but the pace eased to 33.42 per cent, while potato prices continued to slide, contracting 38.84 per cent.

Cereal prices declined for the fourth straight month, down 1.41 per cent, while pulses saw a 11.05 per cent drop, though the pace of decline moderated from December. Milk prices rose 2.51 per cent, lower than the previous month’s increase.

Retail inflation stays below RBI comfort zone

Retail inflation also edged up in January. Consumer Price Index (CPI) inflation rose to 2.75 per cent, driven by higher food and precious metal prices, according to the first print of the revised CPI series with 2024 as the base year.

Inflation stood at 2.73 per cent in rural areas and 2.77 per cent in urban centres, remaining well below the Reserve Bank of India’s medium-term target of 4 per cent.

RBI revises inflation outlook, holds rates steady

In its latest policy review, the RBI Monetary Policy Committee signalled a recalibration of its inflation outlook, moving away from expectations of steady disinflation through FY27.

The central bank has raised its CPI inflation projections for Q1 FY27 to 4 per cent and Q2 FY27 to 4.2 per cent, while revising FY26 headline inflation to an average of 2.1 per cent.

Despite the evolving inflation dynamics, the RBI kept its policy stance unchanged, holding the repo rate at 5.25 per cent and maintaining a neutral stance, citing the need to monitor domestic price trends and global developments.

Growth outlook strengthened

The RBI also revised its real GDP growth projection for FY26 to 7.4 per cent, supported by higher public spending under the Union Budget and progress on trade negotiations with the US and the EU.

While flagging potential moderation later in the year, the central bank said the growth outlook remains stronger than earlier estimates and above the government economic adviser’s projection range of 6.8–7.2 per cent.