Wholesale price inflation touches a 13-month high of 14.23%

admin
admin December 16, 2021
Updated 2021/12/16 at 3:10 PM

India’s wholesale price inflation increased to 14.23% in November from 12.54 percent in October, owing to a 13-month high in primary food inflation and a continued rise in mineral, fuel, and electricity costs, as well as oil and gas prices.

Economists saw the record wholesale inflation figure as a negative surprise since it was the ninth month in a row that India experienced double-digit inflation. Expectations that the Centre’s fuel tax cuts, announced in early November, would bring some relief to manufacturers facing high commodity and freight prices were unfounded.

In fact, fuel and electricity inflation soared to a new high of over 40% in November, up considerably from the corrected estimate of 29.5% in September. A significant increase was also seen in other categories other than fuel.

Manufactured goods inflation fell to 11.92% in November from 12.04% in October, while food inflation, as assessed by the wholesale food index, more than doubled from 3.06% to 6.7%. Inflation in primary goods has more than doubled since October, rising from 5.2% to 10.34%.

According to an official statement, the Wholesale Price Index (WPI) increased 2.73% on a month-on-month basis due to increases in the prices of mineral oils, basic metals, crude petroleum and natural gas, chemicals and chemical products, food goods, and other items.

According to ICRA senior economist Aditi Nayar, the record inflation rate of 14.2% in November 2021 came as a surprise since numerous non-core categories had substantially higher inflation rates than projected. In November 2020, the WPI recorded a 2.29% increase in inflation.

“An unseasonal increase in vegetable prices, as well as increases in the inflation for eggs, meat, fish, and condiments and spices, underpinned the turnaround in primary food inflation to a 13-month high of 4.9% in November 2021, from the previous month’s disinflation of 1.7%,” she said.

Within food items, inflation in eggs, meat, and fish increased from 1.98% in October to 9.66% in November, fruits increased by 15.5% from 8.2% a month earlier, and wheat prices increased by 10.14% from 8.14%. After at least five months of negative inflation, with the most recent record of -18.5%, vegetable prices flipped around in November, with an inflation rate of 3.91%.

According to Ms. Nayar, the current month’s inflation rate for major food items is likely to rise further due to a declining base.

Although the prices of various food items have shown a seasonal downtrend, and the prices of several commodities have corrected to some extent following the reality check provided by the Omicron variant, the rupee has depreciated in recent sessions, which she explained would limit the extent of moderation in WPI inflation in December.

ICRA now forecasts wholesale price inflation of 11.5–12% in 2021–22, with headline and core inflation both projected to remain in double digits for the next three months and one month, respectively.

 

Source: The Hindu

Share this Article
Leave a comment

Leave a Reply

Your email address will not be published.