Friday 27 May 2022
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WPI inflation hits record high of 12.94% in May on costlier fuel

This is the fifth straight month of uptick seen in the WPI-based inflation; in April 2021, the WPI inflation had hit double-digit at 10.49%

The wholesale price-based inflation accelerated to a record high of 12.94% in May, on rising of crude oil and manufactured goods. Low base effect contributed to the spike in WPI inflation in May 2021. In May 2020, WPI inflation was at (-) 3.37%.

This is the fifth straight month of uptick seen in the wholesale price index (WPI)-based inflation. In April 2021, WPI inflation hit double-digit at 10.49%. “The annual rate of inflation, based on monthly WPI, was 12. 94% for the month of May 2021 (over May 2020) as compared to (-) 3.37% in May 2020.

“The high rate of inflation in May 2021 is primarily due to low base effect and rise in of crude petroleum, mineral oils viz. petrol, diesel, naphtha, furnace oil etc. and manufactured products as compared to the corresponding month of the previous year,” the Ministry of Commerce and Industry said.

Inflation in fuel and power basket spiked to 37.61% during May, against 20. 94% in April. In manufactured products, inflation stood at 10.83% in May, against 9. 01% in the previous month. However, inflation in food articles eased marginally to 4.31% in May, even as onion spiked. Inflation in onion stood at 23.24% in May, against (-) 19.72% in April.

The in its monetary policy earlier this month kept interest rates unchanged at record lows and committed to maintain an accommodative policy stance to support growth. RBI pegged retail inflation at 5.1% in this fiscal ending March 2022, with upside risks from higher commodity and re-emergence of higher supply constraints amidst the current phase of lockdowns. Retail inflation data for May is scheduled to be released later in the day.

Chief Economist and Head of Research, Bandhan Bank, Siddhartha Sanyal said: “The sharp rise in WPI inflation in May 2021 is not a surprise as it reflects rising global commodity including metal and energy prices. While domestic demand situation in India remains markedly weak, prices of such commodities typically are strongly influenced by global prices and, thus, will not likely soften in a hurry.”

“CPI inflation will likely stay elevated in the coming months as well and the ’s current CPI forecast of 5.1% during 2021-22 clearly faces material upside risks reflecting global commodity prices, a sharp rise in of petroleum products in India and continued supply disruptions,” he said.

The in its monetary policy earlier this month kept interest rates unchanged at record lows and committed to maintain an accommodative policy stance to support growth.

pegged retail inflation at 5.1% in this fiscal ending March 2022, with upside risks from higher commodity prices and re-emergence of higher supply constraints amidst the current phase of lockdowns.

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