Wholesale Price Index (WPI) inflation in India spiked to 15.08 percent in April, up from 14.55 percent recorded in March, as per the data released by the commerce ministry on May 17.
The WPI-based inflation in April 2021 was 10.74 percent. For over a year, WPI inflation continues to remain in double-digit territory.
The retail inflation rate based on the Consumer Price Index (CPI) in India also peaked at 7.79 percent in April since May 2014, or almost 8 years.
The April inflation reading of 15.08 percent is the highest in the current series, which dates back to April 2013. Therefore, the most recent wholesale inflation figure is almost the highest in nine years!
The predicted imminent increase in inflation in April gave a reason to the Reserve Bank of India’s (RBI) Monetary Policy Committee to convene a month before their scheduled meeting in June.
The outcome of the meeting, marked an increase o 40-basis-point in the repo rate on May 4.
The increase in prices of mineral oils, basic metals, crude petroleum & natural gas, food articles, non-food articles, food products, and chemicals & chemical products, etc. drove the inflation rate in April.
The month-over-month change in the WPI index for April 2022 stood at 2.08 % as against a 2.41% increase in March 2022.
Crude Petroleum & Natural Gas became 0.59% and Minerals 0.13% costlier in April 2022 compared to March 2022.
Fuel & Power group prices increased by 2.79% in April 2022, while in March, they marked an uptick of 6.22%. Prices of the Mineral Oils group increased by 7.58% in April 2022 compared to March 2022. Prices of Electricity relaxed (-9.68%) in April 2022 compared to March 2022.
Manufactured Products became 1.69% costlier in April 2022 compared to March 2022.
The Primary article group reported month-over-month inflation of 2.70% in April 2022 from March 2022. Prices of Food Articles saw the highest sequential gain of 3.61%, while Non-food Articles hiked by 1.20%.
The year-on-year change in the rate of inflation based on the WPI Food Index stood at 8.88% in April 2022 in comparison with 8.71% in March 2022
“The heatwave led to a spike in prices of perishables such as fruits, vegetables, and milk, which along with a spike in tea prices pushed up primary food inflation,” noted Aditi Nayar, ICRA’s chief economist.
Vegetable prices increased 23.24 percent in April, compared with a hike of 19.88 percent in March, the data showed.
Potatoes got 19.84 percent expensive, while onions slipped by 4.02 percent.The prices of fruits increased 10.89 percent last month from 10.62 percent in March, however, wheat prices eased to 10.70 percent in April from 14.04 percent a month ago.
Eggs, meat, and fish prices declined 4.50 percent in April from 9.42 percent a month ago.
Cereals got 7.80 percent costlier last month compared to 8.12 percent in March.
The fuel and power segment saw an increase of 38.66 percent last month from 34.52 percent in March. Petrol price increased by 60.63 percent, while HSD (High-Speed Diesel) price spiked by 66.14 percent. LPG prices rose by 38.48 percent.
The manufactured products segment increased 10.85 percent in April, marginally up from 10.71 percent in the month prior.
“With WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further. We expect a 40-basis-point hike in June 2022 followed by a 35-basis-point rise in August 2022, amidst a terminal rate of 5.5 percent to be reached by mid-2023,” Nayar added.