Inflationary risk: India’s WPI rises to 27-month high in Feb (Roundup)

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New Delhi, March 15 (IANS) India’s annual rate of inflation based on wholesale prices sequentially rose to 4.17 per cent in February from a rise of 2.03 per cent in January.

Similarly, the January inflation rate last month was higher on a year-on-year basis.

“The rate of inflation, based on monthly WPI, stood at (4.17 per cent) (provisional) for the month of February, 2021 (over February, 2020, as compared to 2.26 per cent) during the corresponding month of the previous year,” a Ministry of Commerce and Industry statement on WPI said.

On a segment basis, prices of primary articles, which constitute 22.62 per cent of the WPI’s total weightage, inflated by 1.82 per cent from (-) 2.24 per cent in January.

Besides, WPI food index rose to 3.31 per cent from (-) 0.26 per cent reported for January 2020.

The prices of manufactured items remained at elevated levels with a rise of 5.81 per cent from 5.13 per cent reported for January 2020.

On the same note, the prices of fuel and power with a weightage of 13.15 per cent rose 0.58 per cent from (-) 4.78 per cent in January 2020.

“The index for this (fuel and power) major group increased by (4.51 per cent) to 104.2 (provisional) in February, 2021 from 99.7 (provisional) for the month of January, 2021. Prices of Mineral Oils (8.88 per cent) increased in February, 2021 as compared to January, 2021,” the statement said.

“Prices of Electricity (-0.43 per cent) declined in February, 2021 as compared to January, 2021. Prices of coal remain unchanged.”

On a year-on-year, potato prices decreased by (-) 29.78 per cent in February against 60.73 per cent during the like period of 2020.

Overall, vegetable prices in February fell (-) 2.90 per cent against a rise of 29.97per cent during the corresponding period of 2020.

The prices of pulses became dearer on a YoY basis by 10.25 per cent last month.

“The WPI inflation surged to 4.2 per cent in February 2021, exceeding our already high forecast of 3.9 per cent, primarily on account of commodities, and to a smaller extent, food items,” said Aditi Nayar, Principal Economist, ICRA.

“The doubling in the WPI inflation to a 27-month high 4.2 per cent in February 2021 from 2 per cent in the previous month, was fairly broad-based, reflecting the rise in commodity prices brought on by the global risk-on sentiment, hardening of crude oil and fuel prices, as well as a fading of the favourable base effect for food items.”

According to Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research: “While the consolidated fuel and light inflation is still subdued on an annualised basis and stands at under 1 per cent, the adverse base effect and the current run-up in global crude oil prices are likely to push it into double digit territory by April 2021.”

“Meanwhile, core inflation at 5.5 per cent is currently at a series high and reinforces input cost concerns due to the manufacturing led ‘V’ shaped economic recovery.”

–IANS

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