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India’s factory-gate inflation, as measured by the wholesale price index (WPI), climbed to a ten-month high of 1.81 per cent in January, propelled by a pickup in food prices and firmer core inflation, according to data released by the Ministry of Commerce and Industry on Monday.
After remaining flat on a year-on-year basis in December 2025, food inflation stood at an eight-month high of 1.4 per cent in January. This uptick was accompanied by a sharp increase in core inflation (excluding the volatile food and fuel items), which rose to a 38-month high of 3.2 per cent in January as compared to 2 per cent in the previous month.
“The hardening in global commodity prices and depreciation in the USD/INR pair over the past few months is likely to have put upward pressure on the core index, which rose by 1.4 per cent on a sequential basis in January 2026, the sharpest uptick in 45 months,” according to Rahul Agrawal, senior economist at ICRA.
This comes after India’s retail inflation, under the new 2024 base year series, stood at 2.75 per cent in January while the consumer food price index was pegged at 2.13 per cent during the month.
According to the WPI data, primary food articles recorded an inflation of 1.55 per cent in December, ending an eight-month contractionary streak, led by price rises for vegetables (6.78 per cent), and widening inflation for paddy (0.89 per cent) and eggs, meat and fish (3.66 per cent), in January relative to the preceding month.
Notably, vegetable inflation turned positive in January after nearly a year in deflation, with prices last recording a rise in January 2025 at 8.11 per cent. Madan Sabnavis, chief economist at Bank of Baroda, reckoned that supply shortfalls and base effects attributed to the increase in vegetable prices in the month.
Moreover, pulses (-11.05 per cent) and onion (-33.42 per cent) exhibited narrowing deflation in January compared to the previous month.
ICRA expects the WPI-food inflation to harden further as the effect of an unfavourable base intensifies. In addition, rising global commodity prices and the lagged impact of USD/INR depreciation are likely to keep import costs elevated.
Overall, the agency expects WPI inflation to inch up to ~2.0–2.2 per cent in February 2026.
Inflation in manufactured products — which carries a weight of over 64 per cent in the index — climbed to a ten-month high of 2.86 per cent in January, up from 1.82 per cent in December. Sabnavis attributed this to an uptick in metal prices at 6 per cent. “This is reflective of global effects as there has been a rally in this segment amid the economic and political situation,” he added.
The fuel and power group remained in deflationary territory for the tenth consecutive month at 4 per cent.
Sabnavis expects the WPI inflation numbers to not have a bearing on the monetary policy, but believes that the numbers are still indicative of benign prices from a corporate standpoint where costs will be under control. “If the lower customs duty rates for several commodities are considered, there will be a downward tendency for prices of manufactured products which are important dependent next year,” he reckoned.
As the timeline for the rollout of a new WPI series has not yet been specified, Sabnavis noted that the upcoming GDP series with base year 2022–23 would continue to rely on the existing WPI (base 2011–12) as deflators for various segments in the national product.
