WPI shoots to 12.54% in Oct owing to food, crude oil, metals and chemicals

India’s wholesale price inflation (WPI) rose to 12.54% in October, higher than 10.66% in September and 11.64% in August this year. This is the highest increase in WPI since May, when inflation touched 13.11%.

The increase is primarily due to the rise in prices of mineral oils, basic metals, food products, crude petroleum & natural gas, chemicals and chemical products etc, compared with the corresponding month of the previous year, an official release said.

“Broad-based input price pressures amid a depreciating rupee, as well as a spike in vegetable and electricity prices pushed the WPI inflation to a higher-than-expected five-month high 12.5% in October 2021, with the core inflation rising to an all-time high of 11.9%. Other than non-food primary articles and minerals, all the commodity sub-groups recorded an uptick in Y-o-Y inflation in October 2021 relative to the previous month,” says Aditi Nayar, chief economist, ICRA Ltd. The electricity sub-index spiked by 19% in month-on-month terms in October 2021, pushing up the overall fuel inflation to a sharp 37%, partly reflecting the issues related to coal availability.

Firming up of crude oil prices also saw the index for natural gas surging by 31 % month-on-month in October 2021.

According to Nayar, with demand reviving, producers will start passing through higher input and freight costs, even as the tax cuts on fuel will offer a breather. “Led by the base effect, we expect the WPI inflation to moderate in the months ahead and print at 7.5-8.5% in March 2021,” she adds.

The Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT) releases the index numbers of wholesale price in India (Base Year: 2011-12) on a monthly basis with a time lag of two weeks of the reference month.