economy

WPI inflation accelerates to 14.23%  on  high oil, food prices

WPI inflation accelerates to 14.23%  on  high oil, food prices

NEW DELHI : Wholesale inflation accelerated to an all-time high of 14.23% in November, fuelled by increases in food prices and fuels, complicating the central bank’s efforts to spur growth by keeping interest rates at a record low. Price increases in products such as mineral oils, fuels and food products from a year ago contributed to galloping inflation, according to data from the economic adviser in the Department for Promotion of Industry and Internal Trade. Food inflation surged to 6.7% in November from 3.1% in October. Wholesale Price Index (WPI)-based inflation was at 12.5% in October and 2.29% in November 2020. The inflation for headline and core-WPI and fuel and power printed at all-time high levels in November, said Aditi Nayar, chief economist at rating agency ICRA Ltd. The surge in wholesale prices, along with the quickening of retail inflation to 4.91% in November, has stoked concerns about the recovery seen in the run-up to the festive season. Galloping inflation may prompt monetary policymakers in India to speed up plans to return to pre-pandemic policy settings even though the central bank has pledged to keep monetary policy accommodative until growth revives on a durable basis. Several nations, including the US, are currently grappling with high inflation even as the spread of the Omicron strain of the coronavirus has introduced fresh fears about economic activities. Wholesale inflation has been in double digits since the start of this fiscal, with the pace accelerating since September, rating agency CRISIL Ltd said in an analysis citing chief economist D.K. Joshi. “Cost pressures are also becoming more broad-based as food inflation has begun rising, in addition to already-elevated non-food inflation. The CPI data indicates that producers are gradually passing through these cost pressures to consumers, Joshi said. In the case of many non-food, non-energy items, inflation in November turned out to be steeper than what economists expected. Although food prices have displayed a seasonal downtrend and several commodities have corrected to an extent following the spread of the Omicron variant, the Indian currency has depreciated in recent sessions, which would curtail the scope of moderation in wholesale inflation in December, Nayar said in an analysis. In manufactured products, vegetable and animal oils and fats, textiles, basic metals, steel and fabricated metal products other than machinery saw a sharp rise in prices. Rising input cost has been an issue that businesses have been grappling with for some time now. Manufactured products, which have a weight of over 64% in the Wholesale Price Index, saw inflation of 11.92% in November, while primary articles saw 10.34% inflation and crude oil over 91%. Cooking gas, petrol and diesel, too, faced steep price increases compared to the levels seen a year ago. “As some stability in vegetable prices has been observed in recent weeks, we expect wholesale inflation to subside in coming months, said Pradeep Multani, president of the PHD Chamber of Commerce and Industry. Download.

economy 2021-12-15 Livemint