India’s Consumer Price Index (CPI) or retail inflation, as it is also known as, fell to 4.31%, a five-month low in January 2025. From a 14-month high in October 2024 at 6.21%, CPI has been steadily reducing and has fallen sharply from 5.22% in December 2024 in January.
Arrival of winter harvest and decline in vegetable prices which have brought down food inflation – a component of CPI – are attributed as the primary reasons for this fall. It is further anticipated that timely rabi sowing and continued decline in vegetable prices will positively impact CPI in the next few months as well.
The Reserve Bank of India (RBI), after its quarterly Monetary Policy Committee (MPC) meeting in early February 2025, has projected an annual CPI rate of 4.8% for the current financial year.
“Going ahead, food inflation pressures, absent any supply side shocks, should see a significant softening due to good kharif production, winter-easing in vegetable prices and favourable rabi crop prospects. Core inflation is expected to rise but remain moderate. Rising uncertainty in global financial markets coupled with continuing volatility in energy prices and adverse weather events presents upside risks to the inflation trajectory,” RBI Governor Sanjay Malhotra had said in a statement.
Wholesale Price Index (WPI) has eased marginally to 2.31% in January 2025 from 2.37% in December 2024. Increase in prices of manufacture of food products, food articles, other manufacturing, non-food articles and manufacture of textiles, etc. have been indicated as the reason for the positive rate of WPI.
Industrial Index of Production (IIP), a measure of the country’s industrial output, on the other hand, slowed to 3.2% in December 2024 as opposed to 5.2% in November 2024, which was later revised to 4.19%. Manufacturing sector output during this period grew by 3% as compared to 4.6% during the same period in the previous year.
CPI measures changes in prices of goods and services purchased by consumers. The Wholesale Price Index (WPI) is considered an important measure of the dynamic of movement of prices. It is widely used by several bodies including the government, banks, industry and businesses. IIP is representative of the performance of various industrial sectors of the economy.
CPI numbers are released by the Ministry of Statistic and Programme Implementation (MoSPI) on a monthly basis. IIP numbers are released by MoSPI on a monthly basis with a six-week lag. WPI numbers are released by the Office of the Economic Adviser to the Government of India every month.
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