New Delhi: India’s wholesale prices, measured as the wholesale price index (WPI), rose by more than 13 percent in February this year in comparison with the prices in the same month last year. This is the eleventh straight month when the year-on-year rise in wholesale prices is in double digits.
So what is fueling this high inflation? Is it an increase in the commodity and crude oil prices in the international market or is it something else that is fueling this high inflation and what will be the future direction?
According to Sunil Sinha, the Principal Economist and Director of Public Finance at India Ratings and Research, the real push to WPI inflation is coming from primary and manufacturing inflation. “The primary inflation came in at 13.4 percent in February 2022 and this is the third consecutive month in which it has remained in excess of 13 percent. The manufacturing inflation rose to 9.8 percent in February 2022 from 9.4 percent in January 2022,” said the economist.
Primary articles basically consist of food, fruits, vegetables, cereals and some other non-food items such as oil seeds, minerals, crude and natural gas have a weight of 22.6 percent in the wholesale price index. Under the primary articles, food articles inflation cooled off to 8.19 percent in February after reaching a 23-month high of 10.33 percent in January this year. This was primarily due to the softening of fruits and vegetables' inflation to 19.69 percent in February from 27.61 percent a month ago due to the arrival of fresh stocks in the mandis.
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But fruits and vegetables' inflation at 19.69 percent is still at a high level, nearly 20 percent costlier than their wholesale prices in February last year. On the other hand, cereal inflation surged to over 6 percent in February which is a 25-month high.
