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Wholesale price index based inflation rose to a 30-month high of 5.25 per cent in January, as global crude oil prices hardened though prices of food items eased.
WPI inflation stood at 3.39 per cent in December last year while it was at -1.07 per cent in January 2016.
Official data released on Tuesday indicated that the impact of demonetisation of high value currency on consumption has continued into the New Year though it now seems to be easing.
WPI inflation in food articles contracted by 0.56 per cent in January with a sharp drop in prices of vegetables, onions, potatoes and oil seeds. It is, however, a moderation since December when wholesale inflation in food items contracted to 0.7 per cent.
Vegetable prices at the farm gate contracted by 32.32 per cent in January from a decline of 33.11 per cent in December. Similarly, headline inflation in onions declined by 28.86 per cent in January as compared to a contraction of 37.2 per cent in December. Inflation in pulses also moderated to 6.21 per cent, from 18.12 per cent in December.
Fuel, power up Meanwhile, WPI inflation in the category of fuel and power shot up by 18.14 per cent in January this year, as compared to a rise of 8.65 per cent in December. This was the fastest increase in at least six months and a sharp contrast from January 2016 when inflation in fuel and power contracted by 9.89 per cent.
In the category, WPI inflation rose by the sharpest pace by 31.1 per cent in January, as against a rise of 20.25 per cent in December last year. Inflation in diesel and petrol shot up to 31.10 per cent and 15.66 per cent during the month.
WPI inflation in manufactured items rose marginally to 3.99 per cent in January from 3.67 per cent in December.
Despite the pick up in WPI inflation to its highest level since July 2014, industry is still hoping for a cut in policy rates to boost industrial expansion and consumer demand.
“Wholesale inflation has gone up and this is due to the firming up of oil prices and select commodities such as basic metal alloys that are mirroring the global trends,” said FICCI President Pankaj Patel.
The Reserve Bank of India in its bi-monthly monetary policy last week had maintained the policy rates while it assesses the impact of demonetisation on inflation and output.
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