India's Wholesale Inflation Returns to Positive Territory in December
India's wholesale price inflation climbed for the second consecutive month in December 2025. The numbers moved back into positive territory after two months of deflation. Official data released on Wednesday clearly shows this shift.
Key Numbers and Drivers
The Wholesale Price Index (WPI)-based inflation reached 0.83% year-on-year in December. This marks a significant jump from -0.32% in November and -1.02% in October. The Department for Promotion of Industry and Internal Trade (DPIIT) provided these figures. Notably, wholesale inflation stood at 2.57% in December 2024.
An official statement explained the positive rate. It cited price increases in several sectors. These include other manufacturing, minerals, machinery and equipment manufacture, food products, and textiles.
Looking at sequential changes, primary articles inflation rose 0.21% from November. This category includes food products and minerals. Manufactured products recorded a more substantial increase of 1.82%. However, deflation of 2.31% in the fuel and power category partly offset these gains.
Within primary articles, mineral prices jumped 1.62%. Food articles saw a 0.88% increase. In the fuel and power segment, electricity prices surged 4.46%. Coal prices increased 0.66%, and mineral oil prices edged up 0.07% compared to November.
Economist Insights and Retail Inflation Context
Rahul Agrawal, a senior economist at ICRA Ltd., commented on the data. He said the WPI reverted to an inflation of 0.8% in December 2025 after a two-month gap. The reading was mildly higher than ICRA's expectations of +0.4%.
Agrawal noted the sequential hardening in year-on-year WPI inflation. He said the WPI-food index largely led this change. The index was flat compared to year-ago levels. This followed a 2.6% contraction in November 2025.
The rise in wholesale inflation comes just one day after retail inflation also ticked up. Consumer Price Index (CPI)-based inflation rose to 1.3% in December. This represents a three-month high.
Agrawal highlighted an important convergence. He said the gap between CPI and WPI inflation has narrowed to just 50 basis points in December 2025. This is down from 100 basis points in November 2025.
Core Inflation and Future Projections
Core WPI inflation, which tracks non-food manufactured items, rose to a 34-month high. It reached 2% in December, up from 1.5% in November. According to Agrawal, this reflects hardening global commodity prices. The depreciation of the rupee in recent months also played a role. These factors likely pushed up the landed cost of imports.
ICRA expects wholesale food inflation to harden further in January 2026. The agency believes it will remain on an upward trajectory thereafter. An unfavourable base effect contributes to this outlook.
Global commodity prices have continued to rise sequentially in January. Sharp gains in precious metals and some firming in industrial metals drive this trend. Oil prices have cooled, however.
The ratings agency has projected WPI inflation at 1.5% year-on-year in January.
Policy Implications and Economic Outlook
Policymakers closely track inflation trends. These numbers influence central bank decisions on interest rates. A recent CRISIL report addressed the Reserve Bank of India's Monetary Policy Committee. It expects the committee to hold rates in the upcoming financial year (FY27).
This expectation persists despite forecasts of rising inflation. Price pressures are likely to remain within the RBI's 2-6% target band. The report also projected economic growth for the next fiscal year. It expects growth to ease but remain above trend.
