India’s Wholesale Inflation Rises to 2.38% in February Amid Slower Fuel Contraction, Manufacturing Growth

February WPI inflation sees a marginal rise, driven by a slower decline in fuel prices and an uptick in manufactured goods, while food inflation shows signs of cooling.

March 17, 2025: New Delhi:

India’s Wholesale Price Index (WPI)-based inflation increased to 2.38% in February, slightly up from 2.31% in January, as per provisional data released by the Union Commerce Ministry on Monday.

The marginal uptick was primarily driven by a slower contraction in fuel and power inflation and a rise in manufactured product prices, despite a slight cooling in food prices.

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The latest WPI figures exceeded economists’ projections of 2.36% as estimated in a Reuters poll.

Food Prices Declining, But Remain Elevated

Food inflation, a significant component of the wholesale index, stood at 5.94% year-on-year in February, a drop from 7.47% in January and 8.85% in December.

• Cereal prices rose 6.77% YoY, compared to 7.33% in January.
• Vegetable prices fell 5.80%, following an 8.35% jump in January.
• Onion and fruit prices witnessed an uptick.

Despite some cooling, food prices remain high, largely due to erratic monsoon patterns affecting agricultural supply chains.

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“Vegetable inflation saw the most significant drop, followed by food grains and protein-based items such as milk, eggs, and meat,” said Sonal Badhan, economist at Bank of Baroda.

Beyond Food: Manufacturing and Fuel Trends

• Manufactured product prices, which constitute 64% of the WPI, increased 2.86% YoY, up from 2.51% in January.
• Fuel and power prices declined 0.71% YoY, but at a slower rate than January’s 2.78% contraction.
• Non-food article prices rose 4.84% YoY, up from 2.95% in January.

“The narrowing deflation in the fuel and power sector, along with core WPI inflation reaching a 24-month high of 1.3%, balanced out the drop in food prices,” noted Rahul Agrawal, senior economist at ICRA Ltd.

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Retail Inflation and RBI’s Policy Approach

India’s retail inflation (CPI) cooled to 3.61% in February, compared to 4.26% in January, moving closer to the RBI’s medium-term target of 4%.

The Reserve Bank of India (RBI) recently adjusted its repo rate to 6.25%, signaling the first rate easing since the COVID-19 pandemic in 2020, as part of efforts to stabilize inflation while ensuring economic growth.

With global trade uncertainties, rising commodity prices, and the US Federal Reserve’s upcoming interest rate decision, inflation trends are expected to remain under watch in the coming months.

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