The wholesale inflation in India surged to 14.23% in November over a year ago on account of the so-called base effect, and also a rise in prices of mineral oils, basic metals, crude petroleum, natural gas, chemicals and food products, Hindustan Times quoting official data reported.
The surge in the wholesale price index (WPI), which measures factory-gate inflation, or what producers charge wholesalers, follows a rise in retail prices. On Monday, the consumer price index (CPI) for November climbed 4.91%, despite the central and several state governments reducing taxes on petrol and diesel early in the month to provide relief to the people.
WPI captures the average movement of wholesale prices of goods and excludes taxes. Therefore, reduction in taxes will not be captured in WPI data, a commerce ministry spokesperson said.
Fuel and power have also been the biggest contributors of higher inflation rate in November this year, and were almost 40% higher than a year ago.
WPI inflation in November this year jumped from 12.54% in the previous month (October 2021). However, in November 2020 it was low at 2.29%. Hence the spike in November 2021 wholesale inflation November is also on account of the low base a year ago, the spokesperson added.
“Countries which traditionally have reported low inflation rates such as the US are now reporting record inflation levels due to these global effects,” he said adding that Italy, Spain, Germany and Singapore are witnessing around 20% inflation.
Pradeep Multani, president of the PHD Chamber of Commerce and Industry said WPI inflation has “increased to a record level” because of an increase in prices of food articles, including vegetables, fruits, egg and meat, along with high prices of fuel and power. “As some stability in vegetable prices has been observed in the recent weeks, we expect WPI inflation to subside in the coming months.”
Aditi Nayar, chief economist at ICRA Ltd said the weakening rupee would have adverse impact on containing inflation in December.
Although the prices of various food items have displayed a seasonal downtrend and those of several commodities have corrected to an extent following the reality check provided by the Omicron variant, the rupee has depreciated in recent sessions, which may curtail the extent of moderation in the WPI inflation in December, she explained.
The rupee on Tuesday closed at 75.88 against the US dollar, an 18-month low because of foreign fund outflows and concerns over inflation.
“The hardening in the WPI inflation to 14.2% in November 2021 from 12.5% in October 2021, was dominated by the surge in primary food products to an inflation of 4.9% from the disinflation of 1.7%, respectively, in addition to the rise displayed by minerals, fuel and power, crude petroleum and natural gas as well as core-WPI,” she said.
Only primary non-food articles and manufactured food products recorded a softening in the year-on-year inflation numbers in November, while continuing to remain in double digits, she added.