WPI at 11-month high; crude oil spike raises inflation concerns

New Delhi: India’s wholesale price inflation rose to an 11-month high of 2.13 per cent in February, driven by higher prices of food and non-food articles, according to government data released on Monday. This marks the fourth consecutive month of increase in the Wholesale Price Index (WPI)-based inflation.

The WPI inflation stood at 1.81 per cent in January and 2.45 per cent in February last year. Inflation in food articles rose to 2.19 per cent in February from 1.55 per cent in January. Although inflation in vegetables eased to 4.73 per cent from 6.78 per cent in the previous month, prices of pulses, potatoes, eggs, meat and fish recorded an uptick.

The industry ministry said the positive inflation rate in February was mainly due to higher prices in other manufacturing, basic metals, textiles, non-food articles and food items.

Meanwhile, deflation in the fuel and power basket narrowed to 3.78 per cent in February compared with 4.01 per cent in January. Global crude oil prices averaged USD 68 per barrel in February, up from USD 63 per barrel in January.

Economists warned that wholesale inflation may rise further if crude oil prices remain elevated amid geopolitical tensions in West Asia. Analysts said WPI tends to reflect global price movements more quickly than retail inflation.

According to estimates by India Ratings and Research, rising crude prices following the US-Iran conflict could push wholesale inflation higher in the coming months. The average price of the Indian crude basket touched a 44-month high of USD 101.25 per barrel in March.

Ind-Ra Chief Economist Devendra Pant said WPI inflation could rise to around 3.7 per cent in March, even if retail fuel prices remain unchanged for now.