WPI inflation rises to 13.11% in February; crude prices spike

FPJ Web DeskUpdated: Monday, March 14, 2022, 06:54 PM IST
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As per the government data released on Monday, WPI inflation has remained in double digits for the 11th consecutive month beginning April 2021. /Representational image | Photo credit: Pexels

The wholesale price-based inflation in February rose to 13.11 percent on hardening of prices of crude oil and non-food items, even though food articles softened.

As per the government data released on Monday, WPI inflation has remained in double digits for the 11th consecutive month beginning April 2021.

Inflation last month was 12.96 percent, while in February last year, it was 4.83 percent.

Inflation in food articles, however, eased to 8.19 percent in February from 10.33 per cent. Vegetable inflation was 26.93 percent in February, against 38.45 per cent in the previous month.

“The high rate of inflation in February 2022, is primarily due to rise in prices of mineral oils, basic metals, chemicals and chemical products, crude petroleum & natural gas, food articles and non-food articles etc as compared to the corresponding month of the previous year,” the Commerce and Industry Ministry said in a statement.

Inflation in manufactured items was 9.84 percent in February, against 9.42 percent in January.

In the fuel and power basket, the rate of price rise was 31.50 percent during the month.

WPI remains in double digits

DRE. Reddy, CEO and Managing Partner at CRCL LLP, said, 'WPI inflation has remained in double digits for the eleventh consecutive month beginning April 2021. As the food prices have hardened, the inflation grew at 13.11 percent in February when compared to the inflation in January 2022 which was 12.96 percent. Due to the latest boost in prices due to the war, we are likely to receive a reverse effect which will bring a rise in the upcoming WPIs. Constant rise in the WPI also indicates that manufacturers have regained their pricing power, which was dropped in the past two years due to the pandemic. The global economy is recovering as we witness increase in demand for metals, oils, crude and fertilizers. Moving forward, as the crude prices soften in the summer season and supply issues getting resolved will help ease WPI inflation in the next few months".

WPI rose by a sharp 1.4% on month-on-month basis

Aditi Nayar, Chief Economist, ICRA, said, "The WPI inflation accelerated mildly in February 2022, despite a favourable base effect, led by manufactured products, non-food primary articles, crude oil and natural gas, and printed above expectations. In month-on-month terms, the WPI rose by a sharp 1.4 percent in February 2022, after two months of mild easing, with a broad-based rise across the major groups except for primary food articles. The sequential hardening in the headline and the core WPI in February 2022 follows from receding Omicron fears globally, which have given way to the fresh spike triggered by geo-political tensions.

"The easing in primary food inflation was driven by a sharp drop in vegetable prices, as well as some correction in eggs and certain pulses, amidst rises in many other food groups.

"Looking ahead, the global surge in commodity prices, including crude as well as edible oils poses the chief risk to the WPI inflation trajectory. We now expect the WPI inflation to print at a high 13-14% in March 2022. The timeline with which the WPI inflation will recede into single digits will be driven by the duration of the Russia-Ukraine conflict and its impact on supplies and commodity prices.”

(With inputs from PTI)

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