WPI inflation hits 14-month high on costlier fuel

According to government data released Thursday, inflation rate for food articles was at 1.60 per cent in May 2018, as against 0.87 per cent in the preceding month.

By: ENS Economic Bureau | New Delhi | Published: June 15, 2018 5:21:58 am
WPI inflation hits 14-month high  on costlier fuel The WPI-based inflation stood at 3.18 per cent in April and 2.26 per cent in May last year.

Inflation based on wholesale price index (WPI) jumped to a 14-month high of 4.43 per cent in May, primarily driven by high fuel and food prices. The WPI-based inflation stood at 3.18 per cent in April and 2.26 per cent in May last year.

According to government data released Thursday, inflation rate for food articles was at 1.60 per cent in May 2018, as against 0.87 per cent in the preceding month. Inflation in ‘fuel and power’ basket rose sharply to 11.22 per cent in May from 7.85 per cent in April as prices of domestic fuel increased in line with rising global crude oil rates.

Inflation in vegetables climbed to 2.51 per cent in May, with potato inflation at a peak of 81.93 per cent. Price rise in fruits was in double digits at 15.40 per cent, while pulses saw a deflation of 21.13 per cent. May inflation at 4.43 per cent was a 14-month peak. The previous high was in March 2017, when the WPI inflation stood at 5.11 per cent.

Industry chamber Assocham called for government action to tame fuel price rise saying increasing prices of petrol and diesel may significantly impact import bills, which may subsequently have an impact on exchange rates. “Besides, it might also negatively impact input prices for the industry which has already started feeling the pressure on its profitability,” Assocham secretary general D S Rawat said. Icra principal economist Aditi Nayar said core WPI inflation rose sharply to 4.4 per cent in May from 3.6 per cent in the previous month, with a rise in 15 of the sub-indices. This reflects the pass through of higher input costs, and a weaker rupee.

The WPI inflation for March has been revised upwards to 2.74 per cent from the provisional estimate of 2.47 per cent.

In its second monetary policy review for the fiscal, the Reserve Bank earlier this month hiked interest rate by 0.25 per cent— the first hike in more than four years cent— due to growing concerns about inflation stoked by rising global crude oil prices as well as domestic price increases.

The price of Indian basket of crude surged from $66 a barrel in April to around $74 currently.

Data released earlier this week showed retail inflation jumped to a 4-month high of 4.87 per cent in May on costlier food items such as fruits, vegetables and fuel. RBI mainly takes into account retail inflation data while formulating monetary policy.

For all the latest Business News, download Indian Express App