India's wholesale price inflation experienced a notable easing to 2.4% in December 2024, reflecting significant changes compared to the same month a year prior, as reported by the Ministry of Commerce and Industry on Tuesday. This figure represents a decline from 2.75% in October and 1.89% in November, indicating a dynamic shift in the economic landscape. Key factors contributing to this fluctuation included an uptick in food prices, particularly for vegetables and pulses, alongside increased manufacturing costs.
The food index recorded an inflation rate of 8.89%, slightly down from November’s 8.92%. This marginal decrease can primarily be attributed to a reduction in vegetable prices, highlighting the volatility of food markets and their direct impact on inflation reporting. Moreover, a month-on-month reduction in the wholesale price index (WPI) of 0.38% was observed, following a 0.45% drop in November.
This reflects a more stable trend in wholesale pricing, albeit with varied performance across different categories. Specifically, prices of primary articles, which include essential food items, decreased by 2.1%, while fuel and power prices experienced a rise of 1.90%. Interestingly, there was no month-on-month change in manufactured goods, showcasing stability in this sector despite fluctuations in raw material costs. The WPI for primary articles, holding a weight of 22.6% in the index, showed inflation at 6%, driven predominantly by rising prices for food articles and minerals.
Conversely, fuel and power inflation stood at -3.79%, largely influenced by plummeting mineral oil prices. Furthermore, the manufactured products category saw an increase of 2.14%, reflecting ongoing demand in various sectors. For the month of November, the annual inflation rate based on the All India WPI was pegged at 1.89%.
This was mainly driven by price escalations in food articles, food products, textiles, machinery, and other manufacturing sectors, underscoring the interconnectedness of these domains in India's economic framework. The food index's inflation rate saw a decrease from 11.59% in October to 8.92% in November, with specific figures revealing the food index for November at 200.3, a notable drop from October's 201.2.
This data illustrates the fluctuating landscape of food prices and the importance of tracking these changes for forecasting economic conditions. Moreover, fuel and power prices witnessed a year-over-year decline of 5.83% in November, chiefly due to reduced costs for crude petroleum and natural gas, a significant relief for consumers facing rising living expenses.
Meanwhile, manufactured products recorded a more tempered year-over-year increase of 2%, indicating a less aggressive inflationary environment in this sector. As industries and consumers navigate through these fluctuating prices, understanding the underlying causes of inflation remains crucial for making informed decisions regarding investments, pricing strategies, and economic policies moving forward..