NEW DELHI: Driven by a jump in some food items and fuel prices, India’s Wholesale Price Index (WPI) grew 5.77 per cent in June 2018, a 54-month high, noted the latest data released by the Ministry for Commerce and Industry. WPI in the corresponding month last year was recorded at 0.90 per cent, while it stood at 4.43 per cent in May 2018.The WPI inflation of primary articles rose by 5.3 per cent as against the contraction of -4.17 per cent in June 2017 and 3.16 per cent in May 2018. Inflation on food articles was recorded at 1.8 per cent in June 2018 compared to 1.6 per cent in June 2017.
Within food articles, inflation on vegetables grew by 8.12 per cent, potato by a whopping 99.02 per cent and onions by 18.25 per cent, when compared to the WPI of June last year. Inflation in ‘fuel and power’ basket too rose sharply to 16.18 per cent in June from 11.22 per cent in May as prices of domestic fuel increased during the month in line with the rising global crude oil rates.Petrol prices are up 17.45 per cent in June from 13.90 in May, while diesel prices grew 21.63 per cent in June as compared to 17.34 per cent in May. Inflation in manufactured products stood at 4.17 per cent in June against 3.73 per cent in May.
“The lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to the sharp pickup in the WPI inflation to a 54-month high in June 2018,” Aditi Nayar, Principal Economist at ICRA, said.The sharper-than-expected uptick in the WPI inflation in June 2018 also reinforces expectation of a likely repo rate hike at the next Monitory Policy Committee meeting in August 2018, Nayar said. Last week, data released by the government showed that retail inflation grew 5 per cent in June, a five-month high, from May’s 4.87 percent on the back of rising fuel prices.
Care Ratings said that the pressure on inflation is likely to continue, driven by global crude oil prices staying at high levels. “Further, unfavourable weather conditions and the resultant impact on agriculture output could also push up price levels. However, the growth in inflation in the coming months is less likely to rise significantly given the favourable base effect,” it said.