Surge In March WPI Inflation Of India, More Pressure On Retail Prices
With companies grappling with surging costs of input materials for production and then passing on the increase in costs to consumers, India’s annual wholesale inflation rate surged to 14.55% in March. This rise in the inflation rate also means that the fiscal year of 2021-22 ended with the inflation rate in double-digit territory.
Wholesale prices, a proxy for producer pricing, have risen as input costs for things like petroleum, metals, and chemicals have risen. According to experts, this is putting more pressure on retail pricing.
Fuel prices jumped by 34.52% year over year in March, compared to 31.50% in February, which was far higher than the 13% expected by economists in a Reuters survey.
For the third month in a row, headline retail inflation increased to 6.95%, which was the highest in 17 months and well above the top limit of the Indian central bank’s tolerance zone. This has put more pressure on the central bank to hike interest rates.
Economists have raised their inflation forecasts for the next months,RBI and their expectations for rate hikes by the central bank from 150 basis points to up to 200 basis points by the third quarter of 2023.
The Reserve Bank of India announced earlier this month that it had begun to move away from its ultra-loose monetary policy, which has kept its core lending rate at a record low. Its priorities shift to combating rising inflation after the Russia-Ukraine conflict.
According to data, wholesale manufactured product prices increased 10.71%, compared to 9.84% the previous month, while food prices increased 8.71%, compared to 8.47% the previous month.