New Delhi: Wholesale price-based inflation shot up to a record high of 15.08 per cent in April after the heatwave led to a spike in prices of perishables such as fruits and vegetables, bolstering the possibility of RBI raising the interest rate next month.
The Wholesale Price Index (WPI)-based inflation at 15.08 per cent is the highest print on record in the current (2011-12) series.
This is the 13th month of double-digit inflation and arguments of a low base no longer hold.
Considering the old series as well, the last time WPI inflation was higher than this was in August 1991, when it was at 16.06 per cent.
All sub-heads (food, fuel, and manufacturing) registered an acceleration in inflation in April with fuel and power inflation noting the sharpest increase.
“The high rate of inflation in April 2022 was primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, food articles, non-food articles, food products and chemicals & chemical products etc. as compared to the corresponding month of the previous year,” the commerce and industry ministry said in a statement.
Inflation in food articles was 8.35 per cent as prices of vegetables, wheat, fruits and potato witnessed a sharp spike over the year-ago period.
The rate of price rise in vegetables was 23.24 per cent, while in potato it was 19.84 per cent, fruits (10.89 per cent), wheat (10.70 per cent).
Core inflation accelerated for the third consecutive month to 11.1 per cent from 10.9 per cent in March 2022. Manufactured products inflation was also up at 10.9 per cent in April from 10.7 per cent in March.
Inflation in food articles was 8.35 per cent as prices of vegetables, wheat, fruits and potato witnessed a sharp spike over the year-ago period.
In the fuel and power basket, inflation was 38.66 per cent, while in manufactured products and oil seeds, it was 10.85 per cent and 16.10 per cent, respectively.
Inflation in crude petroleum and natural gas was 69.07 per cent in April.
Data released last week showed that retail inflation rose to a near eight-year high of 7.79 per cent in April, remaining above the Reserve Bank’s inflation target for the fourth straight month.
“With WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further,” said Aditi Nayar, Chief Economist, ICRA Ltd.
“We expect a 40 basis points hike in June 2022 followed by a 35 basis points rise in August 2022, amidst a terminal rate of 5.5 per cent to be reached by mid-2023.”
The central bank had earlier this month hiked key interest rate by 40 basis point to 4.40 per cent and cash reserve ratio by 50 basis points to tame stubbornly high inflation.
“With the source of inflation being global supply issues and not exuberant domestic demand, we maintain our view that over-tightening will douse the fledgling recovery without having a commensurate impact on the origins of inflationary pressures,” Nayar added.
