BackWholesale inflation rises to record 15.88% in May
Central government said that the high rate of inflation is due to rise in prices of mineral oils, crude petroleum & natural gas, food articles, basic metals, non-food articles, chemicals and its related products
PremiumIndia's wholesale price-based inflation increased to a record high of 15.88% in May on rising prices of food items and crude oil. In April, the Wholesale Price Index was 15.08%. In May last year, the WPI index was at 13.11%. According to the commerce ministry, the high rate of inflation is due to rise in prices of mineral oils, crude petroleum and natural gas, food articles, basic metals, non-food articles, chemicals and its related products and food products, etc.
A Reuters poll of analysts had forecast a rise of 15.10%.
The WPI inflation has remained double-digit for the 14th consecutive month since April last year and has been in the upper trajectory for three straight months.
Inflation in food articles in May was 12.34%. In the fuel and power basket, inflation was 40.62% while in manufactured products and oil seeds, it was 10.11% and 7.08%, respectively.
Prices for manufactured products, contributing around 64% to the wholesale price index, rose 10.11%, compared to 10.85% in the previous month, while fuel and power costs increased 40.62% from a year ago period.
India's retail inflation in May stood at 7.04%, remaining above the Reserve Bank's inflation target for the fifth straight month.
DRE. Reddy, CEO and Managing Partner at CRCL LLP said, "Higher crude oil prices and input costs still weigh on the producers and pass-through has resulted in pushing the retail inflation higher. This move also implies that manufacturers are recovering their pricing power, which was weakened due to the pandemic. A good monsoon and ease in tension will assist to lower WPI inflation within the following months, also leading to crude oil prices ultimately putting downward pressure on inflation at large".
A surge in crude oil and commodity prices since Russia invaded Ukraine in February has pushed up prices globally, forcing many central banks to raise interest rates to tame inflation.
The high reading of the two main measures of inflation led economists to expect the Reserve Bank of India (RBI) to raise key interest rates at its next policy meeting in August.
The RBI's Monetary Policy Committee (MPC) raised its benchmark repo rate by 50 basis points to 4.90% last week, after a 40 basis points hike in April, while hinting at more rate hikes to come. (With Agency Inputs)
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