India's February WPI inflation spikes to 13.11%

14 Mar 2022 , 03:30 PM

India’s WPI inflation accelerated in February 2022, despite a favourable base effect, led by manufactured products, non-food primary articles, crude oil and natural gas.

According to the Ministry of Commerce data released on Monday, the annual rate of inflation is 13.11% (Provisional) for the month of February 2022 (over February 2021) as compared to 4.83% in February 2021. The high rate of inflation in February 2022 is primarily due to the rise in prices of mineral oils, basic metals, chemicals and chemical products, crude petroleum & natural gas, food articles and non-food articles etc. as compared to the corresponding month of the previous year.

The Food Index consisting of ‘Food Articles’ from Primary Articles group and ‘Food Product’ from Manufactured Products group has increased from 166.3 in January 2022 to 166.4 in February 2022. The rate of inflation based on the WPI Food Index decreased from 9.55% in January 2022 to 8.47% in February 2022.

Month over Month Change in Major Groups of WPI:

Primary Articles (Weight 22.62%):

The index for this major group increased by 1.09% to 166.8 (provisional) in February 2022 from 165.0 (provisional) for the month of January 2022. Prices of Crude Petroleum & Natural Gas (14.25%), Non-food Articles (3.28%) and Minerals (3.17%) increased in February 2022 as compared to January 2022. Prices of Food Articles (-0.87%) declined in February 2022 as compared to January 2022.

Fuel & Power (Weight 13.15%): The index for this major group increased by 4.35% to 139.0 (provisional) in February 2022 from 133.2 (provisional) for the month of January 2022. Prices of Mineral Oils (7.22%) increased in February 2022 as compared to January 2022. Prices of coal and electricity remain unchanged.

Manufactured Products (Weight 64.23%): The index for this major group increased by 0.95% to 138.4 (provisional) in February 2022 from 137.1 (provisional) for the month of January 2022. Out of the 22 NIC two-digit groups for Manufactured products, 18 groups have witnessed an increase in prices while 3 groups have witnessed a decrease in prices in February 2022 as compared to January 2022. The increase in prices is mainly contributed by basic metals; textiles; paper and paper products; chemical and chemical products. Some of the groups that have witnessed a decrease in prices are the manufacture of fabricated metal products, except machinery and equipment; printing and reproduction of recorded media and tobacco products. While the prices of Manufacture of rubber and plastics products remain unchanged in February 2022 as compared to January 2022.

Aditi Nayar, Chief Economist, ICRA said, “In month-on-month terms, the WPI rose by a sharp 1.4% in February 2022, after two months of mild easing, with a broad-based rise across the major groups except for primary food articles. The sequential hardening in the headline and the core WPI in February 2022 follows from receding Omicron fears globally, which have given way to the fresh spike triggered by geopolitical tensions.

The easing in primary food inflation was driven by a sharp drop in vegetable prices, as well as some correction in eggs and certain pulses, amidst rises in many other food groups.

Looking ahead, the global surge in commodity prices, including crude as well as edible oils poses the chief risk to the WPI inflation trajectory. We now expect the WPI inflation to print at a high of 13-14% in March 2022. The timeline with which the WPI inflation will recede into single digits will be driven by the duration of the Russia-Ukraine conflict and its impact on supplies and commodity prices.”