WPI Inflation Rises To 4-Month High Of 14.55% in March Amid Soaring Food, Fuel Prices

India’s wholesale inflation increased to a four-month high of 14.55 per cent in March compared with 13.11 per cent in February, according to data released by the commerce ministry on Monday, April 18. The Wholesale Price Index (WPI)-based inflation had stood at 7.89 per cent in the same month a year ago. The WPI inflation has now been in double-digits for 12 consecutive months.

As per the press release by the commerce ministry, the WPI based inflation rose to a four-month high primarily due to the rise in crude oil and petrol prices. “The annual rate of inflation is 14.55 per cent (Provisional) for the month of March, 2022 (over March, 2021) as compared to 7.89 per cent in March, 2021.The high rate of inflation in March, 2022 is primarily due to rise in prices of crude petroleum and natural gas, mineral oils, basic metals, etc owing to disruption in global supply chain caused by Russia-Ukraine conflict,” it said.

WPI Food Index

The food index consisting of ‘food articles’ from the government’s Primary Articles group and ‘Food Product’ from Manufactured Products group have increased from 166.4 in February, 2022 to 167.3 in March, 2022. The rate of inflation based on WPI Food Index increased from 8.47 per cent in February, 2022 to 8.71 per cent in March, 2022, data showed.

Fuel and Power

The index for the major power and fuel group increased by 5.68 per cent to 146.9 (provisional) in March, 2022 from 139.0 (provisional) for the month of February, 2022, the commerce ministry said in the release. “Prices of Mineral Oils (9.19%) increased in March, 2022 as compared to February, 202,” it added.

Fuel and power group accounts for 13.15 per cent of the WPI basket.

Manufactured Products

The index for this major group, accounting for over 64 per cent of the WPI basket, increased by 2.31 per cent to 141.6 in March, 2022 from 138.4 for the month of February, 2022. Out of the 22 NIC two-digit groups for manufactured products, 18 groups that have witnessed increase in prices while  three groups have witnessed decrease in prices in March, 2022 as compared to February, the ministry said.

The increase in prices is mainly contributed by basic metals, food products, chemical and chemical products and textiles. Some of the groups that have witnessed decrease in prices are manufacture of other transport equipment; pharmaceuticals, medicinal chemical and botanical products; beverages while the manufacture of wearing apparel remain unchanged last month.

The steep rise in WPI based inflation comes days after the release of the Consumer Price Index (CPI) data, which showed that the more closely tracked index increased to 6.95 per cent in March. While the Reserve Bank of India’s policy target is primarily based on the CPI inflation, WPI inflation can be seen as a forerunner of more high consumer prices as manufacturers will now tend to pass the brunt on the end consumer.

D R E Reddy, CEO and managing partner of CRCL LLP, said, “Beginning April 2021, the WPI inflation has remained in double-digit zone for twelve consecutive months… The reason for the high rate of inflation is primarily believed due to the rise in prices of crude petroleum, natural gas, mineral oils, and basic metals, owing to disruption in the global supply chain caused by the conflict. This will result in amplifying cost pressures, and disrupt supply across the world; majorly impacting crude oil prices followed by food inflation to remain benign on account of normal monsoon and a rise in fertilizer costs and international food prices.

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