WPI Inflation Rises To A Five-Month High In October

India’s wholesale inflation rose to the highest since May, led by a spike in fuel and power, manufactured products and primary articles.

Inflation as measured by the Wholesale Price Index stood at 12.54% in October on an annual basis, compared with a rise of 10.66% in September, according to data released by the Ministry of Commerce and Industry.

The gauge rose to 2.28% over the preceding month in October, against a decline of 0.15% in September.

Retail inflation stood at 4.48% in the reported month compared with 4.35% in September.

Aditi Nayar, chief economist at ICRA, said broad-based input price pressures amid a depreciating rupee, as well as a spike in vegetable and electricity prices, pushed the WPI inflation to a higher-than-expected five-month high in October, with the core inflation rising to an all-time high of 11.9%.

With demand reviving, producers are expected to start passing through higher input and freight costs, even as tax cuts on fuels will offer them a breather, Nayar said. "Led by the base effect, we expect the WPI inflation to moderate in the months ahead, and print at 7.5-8.5% in March 2022."

WPI Inflation Internals

• Inflation in manufactured products—the largest component of the index—rose to 12.04% in October compared with a rise of 11.41% in September.

• Year-on-year, primary articles inflation stood at 5.2% compared with a rise of 4.1% in September.

• Inflation in food articles declined to 1.69% after falling to 4.7% in the previous month.

• Vegetables inflation declined to 18.5% after falling to 32.5% in the previous month. Onions declined 25.01% in October compared with a decline of 1.9% in September. Inflation in fruits rose to 8.2% against a decline of 1.3% in the preceding month.

• Inflation in non-food articles rose to 18.41% compared with a rise of 29.4% in September.

• Fuel and power inflation rose to 37.2% in October against a rise of 24.8% in September.