Wholesale price inflation rose to 2.37 per cent in December 2024, due to spike in prices of non-food articles, manufactured items as well as fuel and power, even though food items saw marginal easing, government data released on Tuesday showed.

The Wholesale Price Index (WPI) based inflation was 1.89 per cent in November 2024. It was 0.86 per cent in December 2023. In October it was 2.75 per cent.

As per the data, inflation in food items eased marginally to 8.47 per cent in December 2024, as against 8.63 per cent in November. Cereals, pulses, and wheat saw easing in inflation in December.

However, inflation in vegetables continued to remain high at 28.65 per cent, potato at 93.20 per cent, and onion at 16.81 per cent in December.

Non-food articles, like oil seeds, saw spike in inflation in December at 2.46 per cent, as against a deflation of 0.98 per cent in November.

The fuel and power category witnessed a deflation of 3.79 per cent in December, against a deflation of 5.83 per cent in November. In manufactured items, inflation was 2.14 per cent, against 2 per cent in November.

ICRA Senior Economist Rahul Agrawal said the uptick in WPI was led by the fuel and power and primary non-food articles, which together accounted for as much as 42 basis points of the 48 basis points increase in the headline print between these months.

Agrawal said global commodity prices have inched up in January 2025 so far vis-à-vis December 2024. The average price of the Indian basket of crude oil, in particular, has surged by 5.8 per cent month-on-month during January 1-13, 2025, amid tighter US sanctions on Russian oil producers and ships.

Additionally, the recent sharp depreciation in the USD/INR pair to above 86.5 from sub-85 in mid-December 2024, would also exert some upward pressure on the landed cost of imports.

"Overall, ICRA expects the headline WPI inflation to rise further to 3 per cent in January 2025 (+0.3 per cent in January 2024), with the uptick in crude oil and commodity prices and the depreciation in the USD/INR pair pushing up the print, along with an unfavourable base," Agrawal said.

ICRA expects the WPI to average at 2.5 per cent in current fiscal and 3-3.3 per cent in FY26.

Barclays in a research note said wholesale price inflation rose to 2.37 per cent year on year in December from 1.9 per cent in November owing to a low base. Sequentially, electricity WPI was up sharply and food prices declined.

Retail inflation data released on Monday showed that consumer price index (CPI) based inflation eased to 4-month low of 5.22 per cent in December on easing food prices.

The RBI's monetary policy committee will announce its interest rate decision on February 7. It is widely expected that the RBI, which eased liquidity in its last meeting in December by reducing cash reserve ratio by 50 basis points, will cut interest rates in 2025.