The wholesale price inflation rose to over 15 per cent in April from 14.55 per cent in the preceding month backed by oil, food and other commodity prices, which have partly soared due to Russia-Ukraine war and related supply disruptions.
This was the 13th month in a row that WPI has been in the double digit. At 15.08 per cent in April, the wholesale price inflation was at its highest since the new series began in 2013.
“The high rate of inflation in April, 2022 was primarily due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas, food articles, non-food articles, food products and chemicals and chemical products, etc. as compared to the corresponding month of the previous year,” the commerce ministry said.
Economists were of the view that since most of the price rise was due to supply disruptions and not exuberant domestic demand, an over tightening by the Reserve Bank of India may stymied the economic recovery.
"With WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further. We expect a 40 bps hike in June 2022 followed by a 35 bps rise in August 2022, amidst a terminal rate of 5.5 per cent to be reached by mid-2023. With the source of inflation being global supply issues and not exuberant domestic demand, we maintain our view that overtightening will douse the fledgling recovery without having a commensurate impact on the origins of inflationary pressures,” said Aditi Nayar, Chief Economist from ICRA.
A State Bank of India research has found that close to 60 per cent of inflaton in India is due to the Ukraine war and that it is futile to expect RBI rate cut could have any impact.
The unprecedented heat wave led to a spike in prices of perishables such as fruits, vegetables and milk, which along with a spike in tea prices pushed up the primary food inflation. Food price inflation reached 8.35 per cent in April from 4.60 per cent a year ago.
The core-WPI inflation too reverted to a four-month high of 11.1 per cent in April, with producers forced to pass on the input price pressures. Higher inflation in cement and steel is also likely to up the government's infrastructure project costs.