As per the data released by the commerce ministry, WPI inflation for February surged again to 13.11% from January figure of 12.96%. Last year during the same month, inflation was at a much lower 4.83% level. Now importantly this is the eleventh consecutive month for which WPI has come in double digits.
The higher WPI inflation is a precursor to higher consumer prices but RBI gives out monetary policy decision based on the CPI data.
Says DRE. Reddy, CEO and Managing Partner at CRCL LLP, "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".
The reason for the sharp rise in inflation in the previous month is that prices of manufacture products moved higher in January. Nonetheless, the two other major components of WPI sae only marginal declines in their inflations.
The manufacturing category which accounts for a major share in the WPI basket surged to 9.84%. Inflation for primary articles edged lowerto 13.39 percent from 13.87 percent, while that for the fuel and power group iwent down to 31.50 percent from 32.27 percent.