WPI, retail inflation record sharp spike

New Delhi: Wholesale inflation soared to a 39month high of 6.55 per cent in February and retail inflation inched up to 3.65 per cent due to the rise in food and fuel prices, justifying the RBI’s move to hold rates in its last policy meeting.

In a worrying sign both wholesale and retail inflation rose in February due to high food prices.

Wholesale inflation jumped to a 39-month high of 6.55 per cent in February and retail inflation soared to four month high of 3.65 per cent due to rise in food and fuel prices.

This means that RBI is unlikely to revise the interest rate to keep a check on inflation.

As far as wholesale inflation is concerned food prices rose by 2.69 per cent in February as compared to a deceleration by 0.56 per cent in the previous month.

The fuel basket also surged by 21.02 per cent from 18.14 per cent in January.

“In addition to the lagged revision in the crude oil sub-index, higher than expected prices of perishable items such as vegetables, fruits and flowers pushed up the wholesale inflation print for February 2017," said Aditi Nayar, principal economist, Icra.

Retail inflation also rose in February due to surge in price of food items like fruits, sugar and confectionery.

The consumer food prices index (CFPI) rose by 2.01 per cent in February from 0.61 per cent in January. The CFPI was 5.3 per cent in February 2016. Inflation in fruits was higher at 8.33 per cent, fuel and light at 3.9 per cent in February.

The rate of price rise in meat and fish was 3.5 per cent in February. Prices of sugar and confectionery items rose by 18.83 per cent in February while inflation in milk and milk product increased by 4.22 per cent.

However, the prices of vegetables and pulses declined by 8.29 per cent and 9.02 per cent respectively.