March WPI inflation rises to 4-month high of 14.55%

The wholesale price-based inflation (WPI) rose to a four-month high of 14.55% in March 2022 compared with 7.89% during the same month last year, the latest data by the Ministry of Commerce and Industry shows. The inflation based on WPI stood at 13.11% in February, the ministry adds.

The high rate of wholesale inflation in March 2022 is primarily due to a rise in prices of crude petroleum and natural gas, mineral oils, and basic metals amid disruption in the global supply chain caused by the Russia-Ukraine war, the ministry said.

The WPI inflation remains in double-digits for around a year now. The significant rise in WPI inflation comes after the consumer price index (CPI)-based inflation data released on April 12 showed retail inflation at a 17-month high of 6.95% in March. This is beyond the Reserve Bank of India's comfort level of 4% (within a band of + or -2%).

The higher WPI inflation means consumer prices will see further inflation as wholesalers pass on the additional cost to retailers.

Primary articles, with a weightage of 22.62% in the WPI index, saw a 2.10% rise for March 2022 compared to February 2022. Crude petroleum and natural gas index increased 21.18%, minerals 9.72% and non-food articles 2.94%.

The fuel and power (weight 13.15%) index rose by 5.68% in March 2022 from February 2022. The mineral oils index rose 9.19% on a month-on-month basis in March.

The index for manufactured products, which has a maximum 64.23% weightage, rose 2.31% in March 2022 over February 2022. Out of the 22 NIC two-digit groups for manufactured products, 18 saw an increase in prices, while 3 groups saw a decrease in prices in the said month. Groups that witnessed a decrease are other transport equipment; pharmaceuticals, medicinal chemical and botanical products; and beverages.

The food index rose by 0.54% in March 2022 vs a 0.06% increase in February 2022. For all commodities, the index rose 2.69% in March 2022 vs 0.76% in February 2022.

In the food articles category, wheat inflation rose 14.04% in March, while vegetable inflation rose a whopping 19.88%. Other essential commodities like potatoes, fruits, and oilseeds saw wholesale inflation of 24.62%, 10.62%, and 22.49%, respectively.

Retail inflation, which is watched more closely than WPI inflation, saw a sharp rise to 6.95% in March 2022 compared to 6.07% in February and 4.29% during the same period last year, the Centre's latest data shows. Among all the baskets, food inflation, which accounts for half of India's inflation basket, rose to 7.47% in March 2022 compared to 5.85% in February 2022.

At the bi-monthly meeting of the Monetary Policy Committee (MPC) this month, the Reserve Bank had also raised the inflation projection for the current fiscal to 5.7%, up from the earlier estimation of 4.5% in the face of rising commodity and crude oil prices. The CPI inflation is now projected at 5.7% in 2022-23 with Q1 FY23 at 6.3%, Q2 at 5%, Q3 at 5.4% and Q4 at 5.1%.