WPI inflation completes a year in double digits: Inflation measured by the wholesale price index shot up to 14.55% in March compared with 13.11% in February and 7.89% in March 2021. The wholesale inflation has been in double digits for the last one year.
A government press release attributed the high inflation to price spikes in crude oil & gas, mineral oils, and basic metals, triggered by global supply chain disruptions caused by the Russia-Ukraine conflict.
Commodity prices push WPI inflation
The food index rose 8.06% in March, the data showed compared with 8.19% in February. Vegetable prices rose 19.88% in March, compared with 26.93% in February. Potato prices rose 24.62% and fruits 10.62% while onion prices fell 9.33%. Wheat prices recorded a rise of 14.04% in March, while eggs, meat and fish prices rose 9.42%.
Retail inflation measured by the consumer price index shot up to 6.95% in March, recording third consecutive month above the RBI’s tolerance level. The headline number was the highest in 17 months. The central bank is holding its key interest rates despite rising prices to support the fragile recovery from the Covid-induced economic crisis.
The RBI had signalled a departure from monetary easing measures brought in to boost the economy reeling under the impact of the Covid-19 pandemic and the tough shutdown measures announced to curb its spread. The loose monetary policy kept interest rates low for a prolonged period before inflation stared rising due to a crude oil price rally triggered by the Russia-Ukraine conflict.
The index for fuel and power segment rose 34.52% in March compared with 31.50% in February. Inflation in the manufactured products segment was 10.71% in March, compared with 9.84% in February.