New Delhi: Wholesale price-based inflation soared to a record high of 15.08 per cent in April. This inflation happened mainly on account of spiralling prices of food, fuel and other commodities. This may prompt the Reserve Bank (RBI) to hike interest rates in upcoming monetary policy review next month.
The Wholesale Price Index (WPI) at 15.08 per cent is the highest in the new series, the data for which is available since 2012-13. The WPI inflation has remained in double digit for the 13th consecutive month since April last year.
“The high rate of inflation in April 2022 was primarily due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas, food articles, non-food articles, food products and chemicals and chemical products etc as compared to the corresponding month of the previous year,” the Commerce and Industry Ministry said in a statement, Tuesday.
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, the ministry said.
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. It remained above the Reserve Bank’s inflation target for the fourth straight month.
To tame stubbornly high inflation, the RBI earlier this month hiked its key interest rate by 0.40 per cent and cash reserve ratio by 0.50 per cent in a surprise move.
ICRA chief economist Aditi Nayar said with some correction in commodity prices as a result of the bleaker demand outlook in China offsetting the depreciation in rupee, the WPI inflation may recede mildly below 15 per cent in May 2022, while remaining uncomfortably elevated.
The heat wave led to a spike in prices of perishables such as fruits, vegetables and milk, which along with a spike in tea prices pushed up the primary food inflation. The core-WPI inflation reverted to a four-month high of 11.1 per cent in April.
“With the WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further. We expect a 40 basis point hike in June 2022 followed by a 35 basis point rise in August 2022, amidst a terminal rate of 5.5 per cent to be reached by mid-2023,” Nayar informed.