Unlike its retail price counterpart, the Wholesale Price Index (WPI)-based inflation rate rose to 2.03 per cent in January from 1.22 per cent in the previous month as fuel and non-food manufactured products faced price pressures. Economists feel that there is no further room for rate cuts by the Monetary Policy Committee of the Reserve Bank of India (RBI) in the current cycle. 

The Consumer Price Index (CPI)-based inflation rate, on the other hand, had fallen to a 16-month low of 4.06 per cent from 4.59 per cent over this period. While the directions of CPI and WPI inflation rates look divergent, a deeper analysis shows that items within each of them moved more or less in tandem. 

The WPI inflation rose because it consists of mainly manufactured items which have a weight 64.23 per cent. Besides, fuel and power have 13.15 per cent weight. Both these categories surged in inflation or decreased in the deflation rates. Core inflation rate (on manufactured items without processed food products) rose to a 27-month high of 5.1 per cent in January. 

Manufactured items saw inflation rate rising to 5.13 per cent in January from 4.24 per cent the previous month. For instance, the inflation rate in base metals increased to 14.46 per cent from 11.49 per cent in this period. Similarly, the inflation rate in mild steel and semi-finished steel rose to 10.7 per cent from 9.93 per cent.