India’s imported inflation hit a 58-month high of 9.73% in February, says a State Bank of India (SBI) Research report. Imported inflation refers to the spike in general price levels of goods due to an increase in the prices of imported commodities which are used as raw materials. The imported inflation rate has been derived by SBI Research by tracking movement in prices of components of the Wholesale Price Index (WPI) and thus indicates price increase in imported items in the WPI basket only.
Global crude oil prices, which have cooled off a little, were higher in the first two months of the year, pushing imported inflation northwards. Movement in global oil prices will be a key factor to be watched hereon.
Recently, the rupee has begun to appreciate against the US dollar. In this week, the Indian currency has risen by nearly 2%. According to some economists, only if this trend continues can one expect its positive impact to trickle down with a lag, which could tone down imported inflation going ahead.