The wholesale price-based inflation bucked the 4-month rising trend in December 2021, and eased to 13.56 per cent, even though food prices hardened, and experts believe the RBI is expected to hold rates steady in its monetary policy next month.
WPI inflation has remained in double digits for the ninth consecutive month beginning April. Inflation in November was 14.23 per cent, while in December 2020 it was 1.95 per cent.
Inflation in food articles, however, spiked to a 23-month high at 9.56 per cent in December, against 4.88 per cent in November. Vegetable price rise rate jumped to 31.56 per cent, against 3.91 per cent in the previous month.
In the food articles category, pulses, wheat, cereals and paddy all witnessed a month-on-month price rise, while potato, onion, fruits and egg, meat and fish saw some softening.
"The high rate of inflation in December 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products, textile and paper and paper products etc as compared to the corresponding month of the previous year," the Commerce and Industry Ministry said in a statement.
Inflation in manufactured items was lower at 10.62 per cent in December, against 11.92 per cent in the previous month. In fuel and power basket the rate of price rise was 32.30 per cent in December, against 39.81 per cent in November.
Data released earlier this week showed, retail inflation based on Consumer Price Index (Combined) rose to 5.59 per cent in December, from 4.91 per cent a month ago as food prices inched up. ICRA Chief Economist Aditi Nayar, said the food inflation has spiked from the marginal 0.1 per cent in October 2021, to an unpleasant 23-month high of 9.6 per cent in December 2021, reflecting the unfavourable base particularly for vegetables.
"Notwithstanding the continued double-digit WPI inflation in December 2021, we expect the MPC to pause in February 2022. The duration of the current wave and the severity of restrictions will determine whether policy normalisation (change in stance to neutral along with hike in reverse repo rate) can commence in April 2022, or be delayed further to June 2022.