WPI Inflation Rises To 12.94% In May
India’s wholesale inflation continued to rise since December, driven by a low base and higher prices of fuel and manufactured products.
Inflation as measured by the wholesale price index stood at 12.94% in May 2021 over the year earlier, compared with 10.49% in April, according to data released by the Ministry of Commerce and Industry on Monday. The index had contracted 3.37% in May 2020.
Month-on-month, the index rose 0.76% in May 2021 compared with an increase of 1.39% in April.
A Bloomberg poll of economists had pegged the wholesale inflation at 13.4%.
Despite a continuous rise in wholesale prices, low demand has forced manufacturers to restrain hike in prices, increasing strain and narrowing margins, the statement said.
The core-WPI inflation, comprising of manufactured non food products, hardened sharply to a series-high 10.0% in May 2021, with a broad-based uptrend across most of the sub-sectors, said Aditi Nayar, chief economist at ICRA. The core-WPI inflation is expected to climb further to a new series-high 10.4-10.9% in June 2021, and sustain in double-digits until September 2021, according to her estimates. However, the headline WPI inflation to recede modestly to 11.9-12.3% in June 2021, as the base starts to normalise.
Transmission of the same to the CPI inflation is expected to remain limited, as cautious demand will keep pricing power in check in the immediate term, Nayar said.
Primary articles inflation stood at 9.61% year-on-year in May against 10.16% in April. Month-on-month, it contracted 0.86%.
Prices of food articles stood at 4.31% (YoY) compared with 4.92% in April. Month-on-month, the index contracted 1.5%.
The index of non-food articles rose 18.37% over the year earlier in May against 15.58% in April. It rose 1.3% over the preceding month.
Fuel and power index rose 37.61% year-on-year in May against an increase of 20.94% in April. Month-on-month, it rose 1.75%.
Manufactured products inflation was at 10.83% (YoY) in May against an increase of 9.01% in April. Month-on-month, it rose 1.24%.