India’s annual rate of inflation based on wholesale prices sequentially rose to 4.17 percent in February from a rise of 2.03 percent in January.
Similarly, the January inflation rate last month was higher on a year-on-year basis.
“The rate of inflation, based on monthly WPI, stood at (4.17 percent) (provisional) for the month of February, 2021 (over February, 2020, as compared to 2.26 percent) during the corresponding month of the previous year,” a Ministry of Commerce and Industry statement on WPI said.
On a segment basis, prices of primary articles, which constitute 22.62 percent of the WPI’s total weightage, inflated by 1.82 percent from (-) 2.24 percent in January.
Besides, the WPI food index rose to 3.31 percent from (-) 0.26 percent reported for January 2020.
The prices of manufactured items remained at elevated levels with a rise of 5.81 percent from 5.13 percent reported for January 2020.
On the same note, the prices of fuel and power with a weightage of 13.15 percent rose 0.58 percent from (-) 4.78 percent in January 2020.
“The index for this (fuel and power) major group increased by (4.51 percent) to 104.2 (provisional) in February 2021 from 99.7 (provisional) for the month of January 2021. Prices of Mineral Oils (8.88 percent) increased in February 2021 as compared to January 2021,” the statement said.
“Prices of Electricity (-0.43 percent) declined in February 2021 as compared to January 2021. Prices of coal remain unchanged.”
On a year-on-year, potato prices decreased by (-) 29.78 percent in February against 60.73 percent during the like period of 2020.
Overall, vegetable prices in February fell (-) 2.90 percent against a rise of 29.97per cent during the corresponding period of 2020.
The prices of pulses became dearer on a YoY basis by 10.25 percent last month.
“The WPI inflation surged to 4.2 percent in February 2021, exceeding our already high forecast of 3.9 percent, primarily on account of commodities, and to a smaller extent, food items,” said Aditi Nayar, Principal Economist, ICRA.
“The doubling in the WPI inflation to a 27-month high 4.2 percent in February 2021 from 2 percent in the previous month, was fairly broad-based, reflecting the rise in commodity prices brought on by the global risk-on sentiment, hardening of crude oil and fuel prices, as well as a fading of the favourable base effect for food items.”
According to Suman Chowdhury, Chief Analytical Officer, Acute Ratings & Research: “While the consolidated fuel and light inflation is still subdued on an annualized basis and stands at under 1 percent, the adverse base effect and the current run-up in global crude oil prices are likely to push it into the double-digit territory by April 2021.”
“Meanwhile, core inflation at 5.5 percent is currently at a series high and reinforces input cost concerns due to the manufacturing-led ‘V’ shaped economic recovery.”
