India’s Wholesale Price Index (WPI) inflation eased to 2.31 percent in January 2025, down from 2.37 percent in December 2024, as per data from the Ministry of Commerce and Industry. The decline was largely driven by lower food prices, though rising costs in food manufacturing and textiles contributed to inflationary pressures.

The WPI Food Index, which tracks inflation in food articles and manufactured food products, moderated to 7.47 percent in January, compared to 8.89 percent in December. Fuel prices also fell, registering a decline of 2.78 percent in January, following a 3.79 percent drop in December. However, manufacturing inflation showed an upward trend, rising to 2.51 percent in January from 2.14 percent in the previous month.

Retail Inflation at a Five-Month Low: India’s retail inflation, measured by the Consumer Price Index (CPI), dropped to a five-month low of 4.31 percent in January, down from 5.22 percent in December. The decline was primarily due to easing food prices, which has raised hopes that the Reserve Bank of India (RBI) may consider a repo rate cut in its April policy review.

Year-on-year food inflation saw a significant moderation, falling to 6.02 percent in January from 8.39 percent in December. A major factor in this decline was the sharp drop in vegetable prices. The inflation rate for vegetables, which was 26.6 percent in December, fell drastically to 11.35 percent in January.

Industrial Production Slows in December: Despite the positive inflation trends, industrial production growth weakened. The Index of Industrial Production (IIP) grew by only 3.21 percent in December, marking a four-month low, down from 4.96 percent in November. The slowdown was primarily attributed to weaker manufacturing output, which weighed on overall industrial growth.

While easing inflation offers some relief, sluggish industrial activity could pose challenges for economic growth. Policymakers will likely monitor these trends closely ahead of the RBI’s next monetary policy meeting.

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