As of January 2026, the Wholesale Price Index (WPI) in India has recently returned to positive territory after a brief period of deflation from past 8 months.
According to the latest government data released on January 14, 2026, the annual WPI inflation for December 2025 rose to 0.83%. This is a significant shift from the negative readings of -0.32% in November and -1.02% in October.
What is WPI
WPI, which stands for Wholesale Price Index, is a key economic indicator used to measure the average change in the prices of goods at the wholesale level—essentially the price at which goods are traded in bulk between businesses before they reach the final consumer.
In India, WPI is a primary measure used to track inflation from the perspective of the producer or manufacturer.
1. Who Calculates It?
In India, WPI is compiled and released monthly by the Office of the Economic Adviser, which falls under the Ministry of Commerce and Industry.
2. Major Components of WPI
The index tracks the prices of a "basket" of goods, which is divided into three main categories:
Key Features
- Goods Only: Unlike the Consumer Price Index (CPI), WPI does not include services like education or healthcare. It only tracks physical goods.
- Base Year: The current base year for WPI in India is 2011-12. This is used as the benchmark to compare current prices.
- Business Perspective: It reflects the price pressures on manufacturers and wholesalers. If WPI rises, it often leads to a rise in retail prices (CPI) later on as businesses pass costs to consumers.
Key Highlights of the Current Scenario
The current rise is driven by a mix of recovering demand and supply-side costs:
- Manufacturing Pressure: Manufactured products, which make up over 64% of the index, saw inflation rise to 1.82%. This suggests that input costs for factories (like minerals and machinery) are beginning to increase.
- Food Price Stabilization: Wholesale food inflation, which had been in a deflationary phase, hit 0.00% (flat) in December. While prices aren't rising sharply yet, the "discount" period for food at the wholesale level seems to have ended.
- Fuel & Power Relief: This remains the only major segment in deflation (-2.31%). Lower global oil prices have helped keep energy costs down for businesses, though electricity prices saw a slight month-on-month bump.
- Expert Outlook: Economists expect WPI to accelerate further to around 1.5% in January 2026 due to rising global commodity prices (like gold and industrial metals) and a "base effect" (comparing against lower prices from the previous year).
What does this increase mean?
for the Indian economy as a whole, this rise is generally seen as positive and healthy.
Here is why:
- Ending Deflation: In October and November 2025, WPI was in "negative" territory (deflation). While falling prices sound great for consumers, prolonged deflation is dangerous for an economy because it kills business profits, discourages investment, and can lead to job cuts. Moving back to 0.83% shows that demand is returning.
- The "Goldilocks" Zone: Economists are calling this a Goldilocks period—not too hot (high inflation), not too cold (deflation). With GDP growth strong (around 7.3%), having low but positive inflation (under 1%) is considered an ideal "sweet spot" for stable growth.
- Business Incentive: A small rise in wholesale prices allows manufacturers (like those in textiles and chemicals) to maintain profit margins. This encourages them to produce more and hire more people.
At 0.83%, it is a healthy sign of recovery. It is far better for India to have 0.83% inflation than to stay in negative territory, as long as it doesn't jump to 5-6% too quickly. Because WPI is a "lead indicator," the rise in wholesale prices often predicts a rise in shop prices a few months later. However, since the current rate is still under 1%, the Indian economy is currently in what experts call a "Goldilocks period"—characterized by high growth (GDP projected at 7.3%) and low, manageable inflation.
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