Costlier fuel and food push up WPI to a record of 12.94%

NEW DELHI: The wholesale price-based inflation accelerated to a record high of 12.94% while retail inflation rose to 6.30% in May, its fastest pace in six months, as fuel and food prices rose at a higher pace, putting pressure on the central bank to tame prices amid a faltering economic recovery.

Low base effect also contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37 per cent.

This is the fifth straight month of uptick seen in the wholesale price index (Wpi)-based inflation. In April, 2021, WPI inflation hit double digit at 10.49%.

The Reserve Bank of India earlier this month warned that high energy prices could stoke inflation while cutting the growth forecast to 9.5% from 10.5% for the current fiscal year beginning April. Annual retail inflation rose 6.30% year-onyear, up from 4.29% in April.

Economists fear a rise in prices after the second wave of coronavirus hit the economy.

Inflation in fuel and power basket spiked to 37.61% during May, against 20.94% in April. In manufactured products, inflation stood at 10.83% in May, against 9.01% in the previous month.

As per the data released by the National Statistical Office (NSO), inflation in the food basket was 5.01% in May, significantly up from 1.96% in the preceding month.

Yuvika Singhal, economist at Quabteco Research in Delhi, said, “The need for the government to pitch in through supply management of food prices and/ or reduction in excise duty on fuel prices to quell some of the price pressures may have turned stronger.”