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Wholesale Inflation Surges To Its Highest In More Than Three Years

Higher mineral and fuel product prices pushes up WPI inflation to 6.55 percent in February



An man buys petrol for his car at an Indian Oil Corporation petrol station Delhi (Photographer: Amit Bhargava/Bloomberg)
An man buys petrol for his car at an Indian Oil Corporation petrol station Delhi (Photographer: Amit Bhargava/Bloomberg)
  • WPI inflation at 6.55 percent – highest since November 2013
  • Inflation build up so far this financial year at 5.82 percent compared to – 1.14 percent last year
  • Primary article index up 0.9 percent in February over the previous month
  • Fuel and power index up 1.3 percent in February over the previous month
  • Manufactured products index flat over the previous month

Higher prices of minerals and crude oil products led to a surge in wholesale inflation in February, taking it to the highest level since November 2013.

The Wholesale Price Index (WPI) rose 6.55 percent in February compared to a year ago, showed data released by the government on Tuesday morning. WPI inflation has risen rapidly from 3.68 percent in December to 5.25 percent in January and over the 6 percent now.

Much of the surge can be attributed to higher commodity prices. The minerals sub-index rose 9 percent in February compared to the previous month. The fuel and power index rose by 1.3 percent month-on-month. On a year-on-year basis, the mineral index has jumped 31 percent while the fuel index has jumped 21 percent.

Wholesale Inflation Surges To Its Highest In More Than Three Years

Food article prices were mostly steady in February with the index rising just 0.1 percent. Non-food article prices, which includes items like rubber, saw a steeper increase of 1.5 percent. Manufactured product inflation was flat during the month, suggesting that pricing power in the hands of manufacturers remains moderate.

Retail inflation and wholesale inflation have diverged once again in recent months. In contrast to the trend last year, retail inflation has fallen while wholesale inflation has risen. In January, retail inflation fell to 3.17 percent. Data for the month of February is due later on Tuesday.

While the nominal anchor for monetary policy in India is retail inflation, the Reserve Bank of India (RBI) has expressed concern about upside risks to inflation. In its February monetary policy review, the monetary policy committee voted to keep rates unchanged and also changed its stance to neutral from accommodative. The central bank has a mandate to bring retail inflation down to 4 percent over the medium term.