WHOLESALE PRICE INDEX (WPI)-BASED INFLATION

May 18, 2022

The Wholesale Price Index (WPI)-based inflation rate surged to a record high of 15.1 per cent in April, with rise in prices of vegetables, fruits, milk and fuel, government data released showed.

Causes:

The heatwave led to a spike in prices of perishables such as fruits, vegetables and milk, which, along with a spike in tea prices, pushed up primary food inflation.
The core-WPI inflation rose to a four-month high of 11.1% in April, with producers forced to pass on the input price pressures. Fuel inflation rose to 38.66 per cent, while inflation for manufactured products rose to 10.85 per cent.
Much of the inflation spike is being seen as a result of the Russia-Ukraine conflict, with the contribution in retail inflation being seen at three-fourths of the index.

Impact

WPI inflation has been in double digits for the thirteenth months in a row now.
With WPI inflation remaining in double-digits, the probability of a repo hike in the June monetary policy has risen further.

Source : The Hindu