Food and fuel pushed wholesale inflation to a 13-month high of 1.26% in April compared with 0.53% in the previous month, according to data released Tuesday.
“The year-on-year (YoY) WPI inflation hardened to a 13-month high of 1.3% in April 2024 (-0.8% in April 2023) from 0.5% in March 2024, driven by fuel and power, WPI-food (primary food + manufactured food) and core-WPI (manufactured non-food products) groups,” said Aditi Nayar, chief economist, ICRA.
Sequentially, the wholesale price index was up 0.8% in April, as food prices rose 2.7% and manufactured products, which account for two-thirds of the weight, were up 0.5%.
Inflation in food articles rose 7.74% in April compared with 6.88% in the previous month, as rice, pulses and vegetables continued to post double-digit inflation.
Paddy inflation rose to 12.03% in April from 11.74% in the previous month, whereas vegetable inflation intensified to 23.6% compared with 19.5% in the previous month.
Potatoes were up 72% and onions 59.8% compared with 53% and 57%, respectively.
Rising crude prices contributed to the fuel and power category returning to inflation after 11 months.
The deflation in manufactured products narrowed to 0.4% compared with 0.9% in the previous month.
Experts indicate that base effect and geopolitical uncertainties are likely to keep wholesale inflation higher in the coming months.
“Going ahead, the base effect will remain adverse over the next two months, thereby resulting in higher WPI inflation. External risks emerging from ongoing geopolitical tensions also need to be monitored, given the risk they can pose to supply chains,” said Rajani Sinha, chief economist, CareEdge.
Brent crude oil prices had touched $90 per barrel in April.
Consumer inflation is also likely to climb above 5% in May, according to experts.
Consumer inflation eased slightly in April to 4.83% from 4.85% in the previous month, even though food inflation rose to 8.7% from 8.5% earlier.
Experts indicated that higher food inflation is unlikely to make the central bank change its stance in its upcoming June meeting. The Reserve Bank of India will likely hold the policy rate at 6.5% for the eighth consecutive time.
RBI’s monetary policy committee will meet June 5-7 after the announcement of election results.
