WPI inflation at record high

NEW DELHI: India’s wholesale inflation touched 15.08% in April, the highest in 27 years, powered largely by power and fuel prices, with the reading being in the double digits for the 13th straight month. The underlying cause: global supply-chain disruptions and the war in Ukraine.

On May 12, the National Statistical Office (NSO) released data which showed that retail inflation, as measured by the Consumer Price Index (CPI), in April was 7.79%, the highest since the 7.87% reading in April 2014.

Data released by the ministry of commerce and industry on May 17 showed that inflation in wholesale markets, as measured by the Wholesale Price Index (WPI) grew at 15.08% in April.

This is the highest wholesale inflation reading in India since March 1995, shows spliced WPI data — the current series only starts from April 2011 — from Centre for Monitoring Indian Economy (CMIE).

What makes the latest WPI reading even more alarming is the fact that it comes on the back of a double digit WPI growth in April 2021. This means that there is practically no base-effect at play in what is a very high, almost unprecedented wholesale inflation reading.

What has led to this rapid rise in wholesale prices? The overall momentum is broad-based. Inflation has been growing in double digits for all of the three main subcategories of WPI: primary articles (22.6% weight), fuel and power (13.15% weight) and manufactured products (64.23% weight) since November 2021.

However, the fuel and power sub-category has been showing a growth of more than 30% in every month since October 2021.

The food sub-category (24.38% weight) of WPI, which includes both primary articles and manufactured food items, grew at 8.9% in April.