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Thursday, January 20, 2022

WPI inflation at double-digit level for 8th straight month

India's WPI Inflation November 2021: This is the highest level of wholesale inflation in the 2011-12 series and eighth consecutive month in which it has stayed at a double-digit level.

By: ENS Economic Bureau | New Delhi |
Updated: December 15, 2021 5:20:41 am
wpi inflation, wholesale inflation(Express photo by Jasbir Malhi)

India WPI November 2021: Wholesale inflation, based on the Wholesale Price Index (WPI), in November rose 14.23 per cent from 12.54 per cent a month ago, mainly on rise in food prices, especially of vegetables, and minerals and petroleum products, Commerce & Industry Ministry data showed on Tuesday.

This is the highest level of wholesale inflation in the 2011-12 series and eighth consecutive month in which it has stayed at a double-digit level. It comes after the retail inflation print for last month, released Monday, had shown a spike to a three-month high of 4.91 per cent despite a cut in excise duty on fuels. The wide gap between WPI and CPI inflation reflects the price pressures on the inputs side, which are expected to pass through to the retail level in the coming months.

The WPI grew 12.54 per cent during October, while the WPI for September was revised to 11.80 per cent from 10.66 per cent. The WPI inflation rate in November 2020 was at 2.29 per cent. Both core and manufacturing inflation stayed over 11 per cent for the fifth straight month at wholesale level.

Primary articles inflation in November doubled to 10.34 per cent from 5.20 per cent in October. Within primary articles, food articles inflation jumped to 4.88 per cent in November from -1.69 per cent a month ago. Vegetables inflation rose 3.9 per cent after falling to 18.5 per cent in October. Inflation in crude petroleum rose to 91.74 per cent in November from 80.57 per cent. As a result, fuel and power inflation remained firm at 39.81 per cent last month (37.18 per cent in October). Core inflation — the non-food, non-fuel inflation component — rose to a new high of 12.3 per cent.

“This was the fifth successive month in which they have remained in excess of 11%. Sticky core inflation indicates that manufacturers are increasingly passing on the higher input costs to their output prices despite uneven recovery in demand. Since fuel is a major input into transportation cost, higher fuel prices push up the distribution cost further. Consequently, inflation in seven groups namely, textiles, paper & chemicals, rubber & plastics, basic metals, fabricated metals and furniture has been in double-digits now for six successive months, with textiles, paper and chemicals touching a new record high in November,” said Sunil Kumar Sinha, principal economist, India Ratings.

Input price pressures and supply-side shortages are pushing up prices at the consumer level and going ahead may further impact demand, economists said. The risks from the new Omicron variant are also expected to create upside risks for global commodity prices. “This record beating increase in WPI inflation was led by a surge in prices of vegetables, minerals and petroleum products,” Rahul Bajoria, chief india economist, Barclays, said.

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