New Delhi, Jan 17 (IANS): India's annual rate of inflation based on wholesale prices rose marginally to 3.39 per cent in December 2016 from 3.15 per cent in November due to hardening of manufactured products and fuel prices, official data showed on Monday.

The Wholesale Price Index (WPI) data released by the Commerce and Industry Ministry, the annual inflation rate was (-)1.06 per cent in December.

Segment-wise, the WPI food articles segment declined by 0.70 per cent during the month under review from 1.54 per cent in November.

The annual wholesale inflation rate for onion on a year-on-year (YoY) basis was lower by (-)37.20 per cent. Overall, vegetable prices came down by (-)33.11 per cent.

In contrast, the inflation rate for potatoes on December-on-December basis stood at 26.42 per cent while that for pulses stood at 18.12 per cent.

Meanwhile, wheat became expensive by 12.82 per cent and protein-based food items such as eggs, meat and fish became dearer by 2.73 per cent.

The expenses on primary articles, which constitute 20.12 per cent of the WPI's total weight, rose by 0.27 per cent during December.

Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise for the ninth straight month, going up by 3.67 per cent last month.

The prices in this category had risen by 3.20 per cent in November.

The sub-category of manufactured food products, which includes sugar and edible oils, registered a rise of 10.75 per cent.

This was mainly caused by a spurt in sugar prices, which rose by 28.04 per cent as a result of production shortages. Edible oils rose by 4.87 per cent.

Similarly, fuel and power price inflation accelerated in December. It edged up by 8.65 per cent, as compared to a rise of 7.07 in November and 6.24 per cent in October.

Segment-wise, price of high-speed diesel rose by 20.25 per cent last month while that for gasoline or petrol climbed by 8.52 per cent and for LPG by 2.09 per cent.

Last week, the Central Statistics Office (CSO) reported that India's annual retail inflation declined to 3.41 per cent in December from 3.63 per cent in November.

The decline in CPI was mainly due to a drop in the annual food inflation -- to 1.37 per cent in December from 2.03 per cent in November.

According to Pankaj Patel, President of industry body Ficci, prices have remained benign and are expected to follow RBI's (Reserve Bank of India) indicative trajectory this year.

"The easing of key price indices makes the context favourable for a rate cut by the RBI at its next monetary policy review due in February 2017," Patel said in a statement

Patel pointed out that for a sustained turnaround government's focus has to be kept on reforms.

"The forthcoming Union Budget is being looked forward to with great anticipation and should focus on driving consumption, investment and job creation," Patel added.

Another business body -- the Associated Chambers of Commerce and Industry of India (Assocham) stated that WPI data showed that pressure on prices eminated from petrol and diesel following firming of crude prices in the global markets.

"What needs to be observed carefully is the build up inflation which has reached 4.28 per cent in the financial year so far, making it imperative to be watchful," D.S. Rawat, Secretary General of Assocham was quoted as saying in a statement.

"The fact that the upward pressure on wholesale prices has come about despite a sharp drop in prices of vegetables shows how the WPI may gather pace further once the seasonal price advantage of veggies goes away."