India's WPI inflation soars to 14.55% YoY in Mar-22 as crude, commodity prices spike

19 Apr 2022 , 08:33 AM

The WPI inflation recorded a broad-based and higher than expected increase to a 4-month high of 14.6% in March 2022, following the spike in commodity prices amidst the escalating Russia-Ukraine conflict.

“The annual rate of inflation is 14.55% (Provisional) for March 2022 (over March 2021) as compared to 7.89% in March 2021. The high rate of inflation in March 2022 is primarily due to the rise in prices of crude petroleum and natural gas, mineral oils, basic metals, etc. owing to disruption in the global supply chain caused by the Russia-Ukraine conflict,” stated the Ministry of Commerce & Industry data released on Monday.

The Food Index consisting of ‘Food Articles’ from the Primary Articles group and ‘Food Product’ from the Manufactured Products group has increased from 166.4 in February 2022 to 167.3 in March 2022. The rate of inflation based on the WPI Food Index increased from 8.47% in February 2022 to 8.71% in March 2022.

Primary Articles (Weight 22.62%): The index for this major group increased by 2.10% to 170.3 (provisional) in March 2022 from 166.8 (provisional) in February 2022. Prices of Crude Petroleum & Natural Gas (21.18%), Minerals (9.72%) and Non-food Articles (2.94%) increased in March 2022 as compared to February 2022. Prices of Food Articles (-0.82%) declined in March 2022 as compared to February 2022.

Fuel & Power (Weight 13.15%): The index for this major group increased by 5.68% to 146.9 (provisional) in March 2022 from 139.0 (provisional) in February 2022. Prices of Mineral Oils (9.19%) increased in March 2022 as compared to February 2022.

Manufactured Products (Weight 64.23%): The index for this major group increased by 2.31% to 141.6 (provisional) in March 2022 from 138.4 (provisional) in February 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 March 2022 as compared to February 2022. The increase in prices is mainly contributed by basic metals, food products, chemical & chemical products and textiles.

Some of the groups that have witnessed a decrease in prices are manufacturers of other transport equipment; pharmaceuticals, medicinal chemical & botanical products; beverages in March 2022 as compared to February 2022. While the Manufacture of wearing apparel remain unchanged in March, 2022 as compared to February, 2022.

Aditi Nayar, Chief Economist, ICRA said “we expect the WPI inflation to remain in the range of 13.5-15% in the current month, partly depending on where crude oil prices settle in the rest of April 2022 and how much petrol and diesel prices are revised further. “The broad-based nature of the rise in the WPI inflation is likely to be of particular concern to the MPC. We see a growing probability of the first repo hike being preponed to June 2022.”