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Last updated: 17 May, 2021  

Inflation.9.Thmb.jpg April WPI up 10.49% on base effect, commodity prices

Inflation.Down.9.jpg
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SME Times News Bureau | 17 May, 2021
The base effect, along with high commodity prices, especially those of transportation fuels, lifted India's annual rate of inflation based on wholesale prices to 10.49 per cent in April from a rise of 7.39 per cent in March.

Significantly, this is the highest rate of WPI inflation in the current series.

The monthly rate of inflation, based on month over month movement of WPI index, in April 2021 stood at 1.86 per cent as compared to March.

On a year-on-year basis, the inflation rate last month was higher. The WPI had come in about (-) 1.57 per cent in April 2020. Last year, the Centre had imposed a full nationwide lockdown to curb the spread of Covid-19 pandemic.

"In April 2021 (over April 2020), the annual rate of inflation (YoY), based on monthly WPI, stood at 10.49 per cent (Provisional)," the Ministry of Commerce and Industry said in a statement on WPI.

"The annual rate of inflation in April 2021 is high primarily because of rise in prices of crude petroleum, mineral oils viz petrol, diesel etc, and manufactured products as compared to the corresponding month of the previous year."

On segment wise YoY basis, prices of primary articles, which constitute 22.62 per cent of the WPI's total weightage, inflated by 10.16 per cent last month from 6.40 per cent in March 2021.

Besides, WPI food index rose to 7.58 per cent from 5.28 per cent reported for March.

The prices of manufactured items remained at elevated levels with a rise of 9.01 per cent from 7.34 per cent.

On the same note, the prices of fuel and power with a weightage of 13.15 per cent rose 20.94 per cent from 10.25 per cent.

"The WPI inflation delivered a negative surprise for yet another month, hardening to a sharper-than-anticipated series-high 10.5 per cent in April 2021. This was led by an unexpectedly large surge in the inflation for manufactured products and food items, which was accompanied by an anticipated spike in minerals and fuels, led by the low base, rise in commodity prices and weakening INR," said ICRA's Chief Economist Aditi Nayar.

"With a sharp month-on-month jump of 1.4 per cent, the core-WPI inflation increased to a fresh series-high 8.4 per cent on a YoY basis in April 2021, driven by metals, paper, rubber, chemicals etc., the global prices of many of which have surged with the optimism generated by the Covid-19 vaccines' rollout, while landed costs were pushed up by the depreciation in the INR."

India Ratings and Research's Principal Economist Sunil Kumar Sinha said: "No doubt, one of the reasons for such a high whole sale inflation is the base effect. Last year, there was a complete lockdown in the month of April 2021."

"The impetus to April 2021 inflation came from all the three major groups, namely primary articles, fuel and power and manufactured products. Within the food component, except cereals, many major items such as pulses, fruits, eggs, meat, tea etc recorded double digit inflation."
 
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