Wholesale Inflation At 2.59% In December

On Tuesday, government data showed that the Wholesale Price Index (WPI) rose to 2.59 percent in December from 0.58 percent in the previous month. Food wholesale inflation, that includes 'Food Articles' from Primary Articles group and 'Food Product' from Manufactured Products group of the WPI Index, was at 11.05 percent as against 9.02 percent in November.

Prices of onion rose by 455.8 percent in December when compared to the same month a year ago. Vegetable prices increased 69.69 percent on a year-on-year basis, while pulses saw an inflation rate of 13.11 percent. Food articles make for 15.26 percent of the combined weightage in WPI.

Rates of non-food articles jumped to 7.72 percent from 1.93 percent a month earlier.

As for manufactured products, that make for 65 percent of combined weight of WPI index, the inflation rate was at (-)0.25 percent.

The WPI numbers come a day after the release of retail inflation data (CPI) for the month of December, which rose sharply to 7.35 percent, the highest level since July 2014.

The data has diminished hopes of a rate cut in the upcoming RBI monetary policy review on 6 February. Previously, RBI kept its key interest rate unchanged citing "much higher than expected" inflation for its decision. RBI takes CPI into consideration to formulate its policy.