The Wholesale Price Index (WPI)-based inflation rose in December 2023 to 0.73 per cent, mainly due to a sharp rise in food prices. The WPI inflation was in the negative zone from April to October and had turned positive in November at 0.26 per cent.

“Positive rate of inflation in December 2023 is primarily due to increase in prices of food articles, machinery & equipment, other manufacturing, other transport equipment and computer, electronics & optical products etc,” the commerce and industry ministry said in a statement on Monday. Food inflation rose to 9.38 per cent in December from 8.18 per cent in November 2023.

Inflation in vegetables was 26.30 per cent, while in pulses it was 19.60 per cent in December.

Meanwhile, India’s retail inflation, based on the Consumer Price Index (CPI), in December 2023 increased to a 4-month high of 5.69 per cent. Though the 5.69 per cent CPI inflation is far from the RBI’s medium-term target level of 4 per cent, it is within the tolerance limit of 2-6 per cent.

The Reserve Bank of India has been tasked by the government to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side. In the monetary policy announced last month, the RBI held interest rates steady and flagged risks of rising food inflation in November and December. It also projected the CPI inflation at 5.4 per cent for 2023-24, with a reading of 5.6 per cent in the third quarter and 5.2 per cent in the last quarter.

(With PTI Inputs)