NEW DELHI: The Centre’s inflation headache seems to be getting severe as the wholesale price index (WPI)-based price rise surged to a 30-year high of 12.96% in FY22, on rising commodity prices and a low base of 1.3% in FY21. The last time wholesale inflation touched such high levels was three decades ago – at 13.7% in FY92 (on base year of 1981-82).
According to the latest data released by the Union commerce ministry on Monday, WPI-based inflation stood at 14.5% in March — a four-month high — compared with 7.89% in the year-ago period. WPI inflation was 13.11% in February this year.
The month of March also saw consumer price index-based inflation rise to a 17-month high of 6.95%.
While the Reserve Bank of India considers retail inflation for its policy decisions, the wholesale price rise does get reflected on the retail inflation print as companies pass on the burden to consumers.
“The high rate of inflation in March is primarily due to rise in prices of crude petroleum & natural gas, mineral oils, basic metals owing to disruption in the global supply chain caused by Russia-Ukraine conflict,” a government release read.
The month-over-month change in WPI for the fuel and power basket in March stood at 2.69% compared to February, while that for manufactured products surged 2.31% over the same period. Fuel & power and manufactured products formed 13.15% and 64.23%, respectively, of WPI.
The rate of inflation based on WPI food index rose from 8.47% in February to 8.71% in March. The food index consists of ‘food articles’ from the primary group and ‘food product’ from the manufactured products group.
“The surge is fairly broad based as primary articles, fuel & power and manufacturing recorded double-digit inflation in March 2022,” said Sunil Kumar Sinha, principal economist, India Ratings. Fuel & power inflation, which was on a declining trajectory, reversed its course in March by increasing to 34.5% against 31.5% a month-ago.
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