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India’s May wholesale inflation rises to 16%, highest since Sept 1991

"The annual rate of inflation is 15.88 per cent (provisional) for the month of May, 2022 (over May, 2021) as compared to 13.11 per cent in May, 2021," said Ministry of Commerce and Industry in a statement.

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New Delhi: India’s wholesale price index (WPI) based inflation remained in double-digit for 14 months in a row and inched up further to 15.88 per cent in May 2022 from 15.08 per cent in the previous month, government data released on Tuesday showed.

“The annual rate of inflation is 15.88 per cent (provisional) for the month of May, 2022 (over May, 2021) as compared to 13.11 per cent in May, 2021,” said Ministry of Commerce and Industry in a statement.

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“The high rate of inflation in May, 2022 is primarily due to rise in prices of mineral oils, crude petroleum & natural gas, food articles, basic metals, non-food articles, chemicals & chemical products and food products etc. as compared to the corresponding month of the previous year,” it further said.

As per the data, the month over month change in WPI index for the month of May, 2022 stood at 1.38 per cent as compared to April, 2022.

While WPI inflation has hardened, the government data released on Monday showed consumer price index (CPI)-based retail inflation eased a little in the month of May with the prices cooling off almost across the board.

The retail inflation in May eased to 7.04 per cent but remained above Reserve Bank of India’s upper tolerance band of 6 per cent. High inflation, both wholesale and retail, has been a key concern for the government and policy-makers.

“Shrugging off the higher base, the WPI inflation hardened further to 15.9 per cent in May 2022, the highest level since September 1991, from 15.1 per cent in April 2022, and exceeded our forecast,” said Aditi Nayar, Chief Economist at research and rating firm ICRA.

She noted that a surge in inflation in the primary food articles, particularly vegetables and eggs, meat and fish, on account of extreme weather conditions and rising input costs, such as fodder prices, pushed up the headline inflation print.

“Additionally, higher inflation was witnessed in the minerals, crude petroleum and natural gas and fuel and power segments, reflecting the increasing global commodity and crude oil prices,” Nayar said.

As per the official data, the index for primary articles increased by 2.80 per cent to 179.8 in May, 2022 from 174.9 for the month of April, 2022.

The index for fuel & power increased by 2.25 per cent to 154.4 (provisional) in May, 2022 from 151.0 (provisional) for the month of April, 2022. Prices of mineral oils (3.34 per cent) increased in May, 2022 as compared to April, 2022. Prices of coal and electricity remain unchanged.

The index for manufactured products which account for 64.23 per cent of the WPI basket increased by 0.56 per cent to 144.8 in May, 2022 from 144.0 for the month of April, 2022.

“Given the weight of oil and fuel items (10.4 per cent) in the WPI basket, the rise in global crude oil prices is expected to put upward pressure on the headline WPI print for June 2022. Further, the weakening of the INR against the US dollar is likely to augment the landed cost of imports in the month, posing upside risks to the headline number. Consequently, we expect the WPI inflation to remain elevated at 15-16 per cent in June 2022. The weakening of the INR and hardening of crude oil prices would transmit faster to the WPI than the CPI,” said ICRA’s Aditi Nayar.

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