Food price relief keeps WPI contained despite December uptick: BoB Economists

New Delhi [India], January 14 : India's wholesale price index (WPI) inflation moved out of deflation and rose to an eight-month high of 0.8% in December 2025, supported mainly by easing food price pressures and a gradual firming up in core inflation.

However, the headline print remained significantly lower than the 2.6% recorded in December 2024, indicating a relatively benign inflation environment, according to an analysis by Bank of Baroda.

Looking ahead, economists cautioned that while global commodity prices such as oil and base metals are currently under pressure, risks remain from currency depreciation and potential geopolitical tensions, which could push input costs higher and add upside risks to inflation in the coming months.

The uptick in December marked a sharp turnaround from (-)0.3% in November 2025, reflecting reduced deflation across food and fuel segments. On a year-on-year basis, food inflation remained flat at 0%, a steep moderation from 8.9% a year ago, offering continued relief to the headline index.

Vegetable prices continued to act as the biggest drag on food inflation, with the index declining for the 11th consecutive month, falling 3.5% in December, compared with a sharp 28.6% increase in December 2024. Prices of key items such as potato, onion, tomato, cabbage, and pumpkin declined, while spices and condiments stayed in contraction for the 17th straight month.

Cereal inflation also remained in deflation, led by a sharper fall in wheat prices and a notable deceleration in paddy inflation. Pulses continued to exert downward pressure on food grain prices, mirroring global trends, particularly the steep fall in international paddy prices.

Fuel and power inflation, though still in deflation, showed signs of easing, with the index contracting 2.3% in December, unchanged from November but slightly higher than last year. The moderation was driven by mineral oils and coal, while electricity prices declined at a faster pace. Analysts noted that a depreciating rupee could limit the pass-through of softer global crude prices to domestic fuel inflation going forward.

Meanwhile, core WPI inflation rose to 2% in December, up from 1.5% in November and 0.7% a year earlier, indicating emerging underlying price pressures. Manufactured product inflation eased on an annual basis but accelerated on a month-on-month basis, driven by basic metals, electrical equipment, and machinery.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor