The fuel & power group index increased by 5.84 percent and the index of manufactured goods grew by 1.54 percent. Inflation in the wholesale price index (WPI) rose sharply to 2.03% in January compared to 1.22% in December on the back of higher fuel prices, as shown by data released by the Ministry of Commerce & Industry. "The rate of inflation, based on monthly WPI, stood at (2.03 percent) (provisional) for the month of January 2021 (over January 2020) as compared to 3.52 percent during the corresponding month of the previous year," the Ministry of Commerce & Industry said in a statement. Meanwhile, data released on Friday showed that consumer price index (CPI)-based retail inflation eased from 4.59 percent in December 2020 to 4.06 percent in January 2021, amid a sharp decline in food prices.
Retail inflation - or the rate of rising in consumer prices as calculated by the Consumer Price Index (CPI) - is mainly tracked by the Reserve Bank of India (RBI) in order to make adjustments to its monetary policy. At its last monetary policy meeting on February 5, the central bank kept its policy rates steady with an accommodative stance, noting that inflation was expected to stay within the targeted range over the next few quarters.