Global Economy

WPI inflation spikes to over 8-year high of 7.39 per cent in March

Increase in prices of crude oil, petroleum products and basic metal coupled with the low base effect pushed the wholesale inflation in India to over eight-year high of 7.39% in March, official data released on Thursday showed. WPI inflation had stood at 7.4% in October 2012.

The Wholesale Price Index (WPI) inflation in March, which has been rising over the last few months, is way higher than 4.17% in February and the revised 2.51% in January. It stood at 0.42% in March 2020. The data for March is provisional and is likely to undergo change.

“The prices of crude oil, petroleum products and basic metal substantially increased in March 2021 as compared to the corresponding month of last year,” ministry of commerce and industry said in a statement. “Also, due to nationwide lockdown, the WPI index for the month of March 2020 (120.4) was computed with relatively low response rate,” it added.

The WPI for March, 2021 have been compiled at a weighted response rate of 78% while the final figure for January 2021 is based on the weighted response rate of 89%.

As per the data, prices of fuel and power went up by 10.25% in March compared to March 2020 followed by 7.34% jump in prices of manufactured products and 6.4% jump in primary articles including food articles.

“The WPI inflation recorded a broad-based hardening to a series-high 7.4% in March 2021 from 4.2% in February 2021, and printed much higher than our expectation of 6.1%, with faster than anticipated upticks in inflation for core items and fuels,” Aditi Nayar, chief economist, ICRA said.

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“We expect the headline and core WPI inflation to rise further over the next two months, peaking at around 11.0-11.5% and 8-8.5%, respectively in May 2021,” Nayar said, adding there is negligible space for rate cuts to support growth in spite of the growing uncertainty related to the surge in Covid-19 cases, localised restrictions and emerging concerns regarding migrants returning to the hinterland.

While prices of crude petroleum was 73.7% higher in March 2021 compared to a dip of 38.98% in March 2020, prices of oil seeds jumped by 23.58% as against 2.89% in March last year. Fruit prices last month formed up by 16.33% while prices of pulses were higher by 13.14% last month. Vegetable prices, however, softened in March 2021 registering a dip of 5.19% compared to a growth of 10.64% in March 2020. This is on the back of over 33% dip in potato prices in March this year.

Even petrol prices went up by 18.48% while LPG prices were up by 10.3% and HSD prices were up by 18.27%.


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