NEW DELHI: The Wholesale Price Index (WPI) hit a new high of 15.88% on Tuesday, the Ministry of Commerce data showed. In April, it was at 15.08%, whereas in the month of May of the previous year, it stood at 13.11%. This is the fourteenth straight month when wholesale inflation is in double digits.
Inflation in May surged sequentially, majorly because of rising in prices of mineral oils, crude petroleum & natural gas, food articles, basic metals, non-food articles, chemicals & chemical products and food products, etc.
Inflation in food articles in May stood at 12.34% as compared with 8.35% in the previous month. It rose majorly because of a significant increase in the prices of fruits and vegetables. Meanwhile, in the fuel and power basket, inflation was at 40.62%.
According to Dr. D.K. Srivastava, chief policy advisor, EY India, said the wholesale inflation rate at 15.9% signals continued upward pressure on CPI inflation in the next few months. This inordinately high WPI inflation is driven mainly by two commodity groups namely, primary articles such as food items as well as crude, fuel, and oils.
“Some state electricity boards have recently revised their tariffs upwards. With a high WPI inflation, implicit price deflator (IPD)-based inflation will also be driven up implying buoyant tax revenues in the first quarter of 2022-23,” Srivastava said.
“The rise in the WPI inflation, in contrast to the easing in CPI inflation in May 2022, may imbue some caution into the outlook for monetary policy actions. We continue to expect 60 basis point of repo hikes over the next two policy reviews,” said Aditi Nayar, chief economist at ICRA.