WPI Inflation Climbs To 2.13% As Price Pressures Build

India’s wholesale inflation rose to an 11-month high in February, reflecting stronger price pressures in manufactured goods and primary commodities.

Government data released on Monday showed the wholesale price index (WPI) inflation rate climbed to 2.13% in February, up from 1.81% in January and 0.96% in December.

The increase suggests that price pressures are gradually building across parts of the economy, even though fuel-related inflation remained in negative territory.

What Drove The Rise In Wholesale Inflation?

Manufactured products, which carry the largest weight in the WPI basket, contributed the most to February’s increase in inflation.

Inflation in this category rose to 2.92% in February, slightly higher than 2.86% in January and 2.03% in December.

Food inflation also edged up. Prices of food items increased by 1.85% in February, compared with 1.41% in January, indicating mild upward pressure in agricultural commodities.

Primary articles, which include farm produce and minerals, recorded a noticeable rise on an annual basis. Inflation in this category climbed to 3.27%, up from 2.21% in January and 0.21% in December.

However, on a month-to-month basis, the category showed a slight decline of 0.52%, largely due to lower prices of food articles and minerals.

During the month, food articles recorded a price decrease of 1.33%, while minerals declined by 1.21%. On the other hand, crude petroleum and natural gas prices rose by 4.17%, whereas non-food articles increased by 0.83%.

Why Did Fuel Prices Remain Negative?

Despite a small monthly increase, fuel and power inflation remained negative in February.

Inflation in this category stood at -3.78%, slightly better than -4.01% in January. In December, the figure was -2.31%.

While fuel prices were still showing annual deflation, the index rose 1.17% on a month-to-month basis, suggesting some early signs of upward pressure.

Global energy market fluctuations are already starting to change inflation expectations. The ongoing tensions in West Asia involving Iran, Israel, and the U.S. have caused significant swings in global oil prices.

Shipping disruptions near the Strait of Hormuz, a key route for crude oil transport, have raised concerns about possible supply bottlenecks. Nearly one-fifth of global oil trade passes through this corridor.

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What Can People Expect Next?

Economists and market participants will be watching global commodity price trends closely in the coming weeks.

If oil prices keep climbing, inflation in the country could move up as well. Fuel and transportation would become more expensive, and those two costs feed into almost every part of the economy. Food prices and manufacturing costs will matter too, since they often shape where inflation heads next.

At this point, the recent figures suggest that wholesale inflation is slowly increasing, but much will depend on energy markets and geopolitical developments in the coming months.

Sources:

ET

Forbes India