CHENNAI: India’s wholesale price inflation turned positive in December 2025, rising to 0.83 percent from a contraction of 0.32 percent in November, signalling a clear shift in price momentum after several months of deflationary pressures at the producer level. The rebound reflects a gradual firming up of costs across large parts of the economy, particularly in manufactured goods and primary articles, even as fuel and power prices continued to exert a moderating influence.
According to economists, the move into positive territory suggests that the phase of falling wholesale prices, which had been driven by soft global commodity prices and weak pricing power among producers, is now easing. Manufacturers reported higher input costs in December, especially for metals, chemicals, machinery and other industrial goods, pointing to a combination of improving demand and stabilising supply chains. Prices of several primary commodities also edged up, contributing to the overall rise in the index.
At the same time, they say, food prices at the wholesale level remained largely subdued, preventing a sharper rise in inflation. Some food categories continued to show weak or flat price movement compared with a year earlier, reflecting adequate supply and relatively stable farm output. Fuel and power inflation also stayed in negative territory, helped by lower global energy prices and controlled domestic pricing, which kept overall wholesale inflation from rising more steeply.
The turnaround in wholesale inflation is significant because it often acts as an early indicator of future movements in retail prices. When producers begin to face higher costs, these are eventually passed on to consumers, especially if demand conditions allow. In December, consumer price inflation also moved higher, though it remained well below the Reserve Bank of India’s comfort zone, suggesting that pricing pressures are still relatively mild at the household level.
For policymakers, the December data reinforces the view that the deflationary phase in goods prices is ending, but it does not yet point to any overheating in the economy. The Reserve Bank of India has been operating in an environment of unusually low inflation, which has given it space to focus on supporting growth. The gradual firming of wholesale prices indicates that economic activity is gaining traction, but the overall inflation environment remains benign.
From a business perspective, the rise in wholesale inflation may lead to some pressure on margins in sectors where input costs are increasing faster than selling prices. Companies in manufacturing, metals, chemicals and capital goods are likely to feel this first. However, the continued softness in fuel and food prices provides an important cushion, limiting the risk of a broad-based surge in costs.
Looking ahead, the sustainability of this inflation rebound will depend on global commodity prices, domestic demand conditions and the pace of economic recovery. If industrial activity continues to strengthen and global prices remain firm, wholesale inflation is likely to stay in positive territory in the coming months. For now, December’s data marks a turning point from deflation to mild inflation, pointing to a more balanced and stabilising price environment across the Indian economy.