Wholesale inflation shoots up to 14.5% on pricier fuels

NEW DELHI: Wholesale inflation rose to 14.5%, its second highest value in at least 10 years, and the highest since November last, driven by fuel prices, and highlighting the tailwinds to inflation.

The latest WPI value, which is the second highest in the current series (since April 2012), comes after retail inflation, as measured by the Consumer Price Index (CPI), surprised analysts to grow at 6.95% in March 2022.

Wholesale prices, as measured by the wholesale price index (WPI), hardened significantly between the months of February and March, according to latest data released by ministry of commerce and industry. At 14.5%, the annual growth in WPI in March was almost 1.5 percentage points higher than the 13.1% WPI number for February.

The highest WPI growth in the current series was recorded in the month of November 2021, when it grew at 14.9%.

With March being the last monthly value for fiscal year 2021-22, annual wholesale inflation in 2021-22 came at 13%, the highest in the current series by a long distance. The second highest WPI growth was in 2012-13, when it grew at 6.9%. Annual growth in CPI in 2021-22 was much lower at 5.5%.

To be sure, the composition of CPI and WPI baskets is very different, both in terms of kind of commodities which are included in it and their weights. When seen against this backdrop, the surge in both CPI and WPI numbers in March suggests that inflationary tailwinds are broadbased in the Indian economy.

Unlike in the case of retail inflation, which was largely driven by a surge in food prices, fuel prices account for more than 25% of the growth in wholesale inflation in March.