India's wholesale price index (WPI) based inflation has turned positive, reaching 0.73% in December 2023, according to data released by the Ministry of Commerce and Industry. This marks a notable shift from the previous month, November 2023, when the WPI inflation stood at 0.26%. After nearly seven months of remaining in negative territory, the WPI inflation had returned to positive territory in November.

The positive rate of inflation in December is primarily attributed to increases in the prices of food articles, machinery and equipment, other manufacturing, other transport equipment, and computer, electronics & optical products. The annual rate of inflation is 0.73% for December 2023. The WPI captures the average movement of wholesale prices of goods, serving primarily as a GDP deflator. It considers only basic prices and excludes taxes, rebates/trade discounts, transport, and other charges.

The official WPI for all commodities with the base year 2011-12 = 100, decreased to 151.6 in December 2023 from 152.9 in the previous month. Furthermore, the index for manufactured products (weight 64.23 per cent) for December 2023 reached 140.1 from 140.4 in November. The month-over-month change in WPI for December 2023 stood at (-) 0.85% compared to November 2023.

In contrast, retail inflation hit a four-month high in December 2023, primarily due to a rise in food prices. Food inflation came in at 9.53% in December, up from 8.7% in November 2023, and significantly higher than the 4.19% recorded in December 2022. The Ministry of Statistics and Programme Implementation (MoSPI) reported that retail inflation had reached 5.69% in December.

RBI Governor Shaktikanta Das had cautioned in early December that inflation figures might show an uptick in November and December due to pressures on food output. Taking these factors into account and assuming normal monsoons, the CPI-based inflation is projected at 5.4% for 2023-24, with 5.6% for Quarter 3 and 5.2% for Quarter 4.