May WPI inflation spikes to 15-month high on food prices
- Inflation in India’s wholesale prices accelerated to a 15-month high in May
Highlights:
- Economists said the acceleration in wholesale inflation in May signals there is room for a further surge in consumer prices despite retail inflation easing to a 12-month low.
- Especially as food and industrial input prices are spiking globally.
- May was the seventh month in a row that the WPI rose on a year-on-year basis after seven consecutive months of deflation, and it is expected to quicken over 3% this month.
- The heatwaves in May helped fire up the inflation rate for vegetables to the highest level in nine months and a six-month high for fruits.
- Spikes in vegetable prices were partly due to supply shortfalls and that the heatwave aggravated the challenge
- India Ratings flagged similar concerns about pulses prices remaining elevated in double-digits as the new crop would be harvested only in October-November.
- Elevated food inflation at the wholesale level is worrisome as this would keep retail food prices firm even going forward.
- Positive rate of inflation in May is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing, etc.
Prelims Takeaway
- WPI
- Inflation