Wholesale inflation increased to a four-month high of 14.55 percent in March compared with 13.11 percent in February, mainly due to hardening of crude oil and commodity prices, even though vegetables witnessed easing of price pressures.
As per the government data released on Monday, WPI inflation has remained in double digits for the 12th consecutive month beginning April 2021.
The Wholesale Price Index (WPI)-based inflation was 7.89 percent March 2021.
The WPI inflation has remained in the double digits for the 12th consecutive month beginning April 2021.
According to the Commerce Ministry, the WPI based inflation rose to a four-month high primarily due to the rise in crude oil and petrol prices.
“The annual rate of inflation is 14.55 per cent (Provisional) for the month of March, 2022 (over March, 2021) as compared to 7.89 per cent in March, 2021.The high rate of inflation in March, 2022 is primarily due to rise in prices of crude petroleum and natural gas, mineral oils, basic metals, etc owing to disruption in global supply chain caused by Russia-Ukraine conflict," it said.
Inflation in manufactured items was 10.71 percent in March, against 9.84 percent in February.
In the fuel and power basket, the rate of price rise was 34.52 percent during the month.
Inflation in crude petroleum spiked to 83.56 percent in March, from 55.17 per cent during February.
Retail inflation spiked to 6.95 percent in March — the third consecutive month that the consumer price index has breached the RBI’s tolerance limit of 6 per cent, data released last week showed.
The Reserve Bank earlier this month kept its key repo rate — at which it lends short-term money to banks — unchanged for the 11th time in a row at 4 percent, to support growth.
Experts weigh in:
DRE Reddy, CEO and Managing Partner, CRCL LLP
Beginning April 2021, the WPI inflation has remained in double-digit zone for twelve consecutive months. While inflation has seen an increase in the last couple of months with a rise of 1.59 percent, the food and commodity prices continue to harden. Additionally, the food Index increased from 8.47 percent in February 2022 to 8.71 percent in March 2022 due to the increase in the cost of cooking oil that touched a new peak due to the ongoing Russia-Ukraine conflict.
However, the reason for the high rate of inflation is primarily believed due to the rise in prices of crude petroleum, natural gas, mineral oils, and basic metals, owing to disruption in the global supply chain caused by the conflict. This will result in amplifying cost pressures, and disrupt supply across the world; majorly impacting crude oil prices followed by food inflation to remain benign on account of normal monsoon and a rise in fertilizer costs and international food prices. Faster growth in prices is bound to harden inflation expectations going forward; this has the potential of creating a vicious cycle of inflation and inflationary expectations feeding into and off each other.
Raghvendra Nath, Managing Director, Ladderup Wealth Management
WPI worsened further to 14.55 percent in March, being the 12th straight month where the inflation has stayed in double digits. This was the highest month on month WPI increase experienced by the economy since the WPI series began in 2004. The margins of companies across sectors may further face headwinds for at least next 2 quarters, owing to the Russia-Ukraine war as it continues to affect commodity and food prices, fresh set of restrictions if implemented due to the rising COVID cases can again be troublesome for the economy.
(WIth PTI inputs)