The country's annual rate of inflation based on all-India Wholesale Price Index (WPI) eased to a 24-month-low of 4.73% for the month of January 2023 (over January 2022) against 4.95% recorded in December 2022, the provisional data shared by the commerce ministry showed on Tuesday.

The ministry said the decline in the wholesale inflation in January 2023 was primarily contributed by "mineral oils, chemicals & chemical products, textiles, crude petroleum & natural gas, textiles, and food products".

On a month-on-month basis, the WPI index saw an increase of 0.13% in January against a contraction of 1.12% in the previous month.

Among primary articles, the index increased by 0.93% in January 2023 over December 2022, with the prices of minerals (2.62%), non-food articles (1.58%) and food articles (0.92%) increasing in the said month. The prices of crude petroleum and natural gas declined 0.85% in January 2023 as compared to December 2022.

The fuel and power index declined 1.39% in January 2023, while the prices of mineral oils declined 2.13% during the period.

The index for manufactured products increased by 0.14% in January 2023. Out of the 22 NIC two-digit groups for manufactured products, 12 groups saw an increase in prices, while 10 groups saw a decrease in prices.

Notably, India’s retail inflation, measured by the Consumer Price Index (CPI), jumped to 6.52% in January 2023 from 5.72% in December 2022, breaching the Reserve Bank of India’s (RBI) upper tolerance limit of 6%, the government data released yesterday showed.

While urban inflation rose to 6% in January, compared with 5.39% in the previous month, the rural inflation soared to 6.85% last month from 6.05% in December 2022. Food inflation, measured by the Consumer Food Price Index and accounts for nearly half the CPI basket, rose to 5.94% in January, up from 4.19% in December. Fuel and light inflation rose 10.84%. The inflation rate for the clothing and footwear segment rose by 9.08%.

In the food basket, the inflation rate for vegetables contracted by 11.70% in January, while that for cereals rose by 16.12%. The inflation rate for eggs and milk stood at 8.7%. Inflation in spices jumped to 21%.

India's retail inflation had eased to a one-year low of 5.72% in December 2022, down from 5.88% in November 2022, thus staying below the Reserve Bank's upper threshold of 6% for the second month in a row.

According to the RBI, the country’s retail inflation for FY2022-23 is projected at 6.5%, whereas for FY23-24 it is expected to stay within the RBI’s upper tolerance band at 5.3%, with Q1 at 5%, Q2 at 5.4%, Q3 at 5.4%, and Q4 at 5.6%.

“Headline inflation has moderated with negative momentum in November and December 2022, but the stickiness of core or underlying inflation is a matter of concern. We need to see a decisive moderation in inflation. We have to remain unwavering in our commitment to bringing down inflation. Thus, monetary policy has to be tailored to ensuring a durable disinflation process,” RBI Governor Shaktikanta Das said during the MPC announcements last week.