New Delhi: Wholesale price-based inflation spiked to a record 17-year high of 15.08% in April on rising prices across segments from food to commodities, remaining in double digits for the 13th month in a row.
The wholesale price index (WPI)-based inflation was 14.55% in March and 10.74% in April last year. The WPI inflation rate in November 2020 was at 2.29%.
Russia’s invasion of Ukraine in February has supercharged already rising commodity and fuel prices and kept global policymakers busy trying to contain red-hot inflationary pressures.
The commerce and industry ministry said in a statement: “The high rate of inflation in April 2022 was primarily due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas, food articles, non-food articles, food products and chemicals and chemical products, etc. as compared to the corresponding month of the previous year.”
Fuel prices, a big component of the increase, jumped 38.66% on the year versus 34.52% in March. Inflation in crude petroleum and natural gas was 69.07% in April.
A more than 4% rupee depreciation against the dollar this year has also made imported items costlier.
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Inflation in food articles was 8.35%, as prices of vegetables, wheat, fruits and potato witnessed sharp spike over the year-ago period. In manufactured products and oil seeds, inflation was 10.85% and 16.1%, respectively.
“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,” Aditi Nayar, chief economist at ICRA, the Indian arm of ratings agency Moody’s told Reuters.
Data released last week showed that retail inflation rose to a near eight-year high of 7.79% in April, remaining above the Reserve Bank’s inflation target for the fourth straight month.
To tame stubbornly high inflation, the RBI earlier this month hiked its key interest rate by 40 bps and cash reserve ratio by 50 bps in a surprise move. (One bps is a hundredth of a percent.)
A rising WPI-based inflation is a cause of worry because it captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator (a measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year).
(With inputs from agencies)