NEW DELHI: The wholesale price index (WPI)-based inflation rose to 11.39 per cent in September, its highest level in the 2022-23 series, from 9.92 per cent in August, driven by a broad-based rise in prices of food, fuel and manufactured goods, according to data released on Wednesday.
The all-commodities index rose to 112.5 in September from 110.8 in August. The Ministry of Commerce and Industry also released India’s goods output producer price index (PPI), which rose to 112.5 in September, taking the PPI inflation rate to 11.39 per cent from 9.81 per cent in August.
According to the WPI data, fuel and power inflation rose to 25.85 per cent in September from 22.93 per cent in August as crude petroleum and natural gas inflation surged to 57.32 per cent from 34.41 per cent.
Coal and lignite inflation also rose to 9.31 per cent from 1.57 per cent, while mineral oil inflation moved up to 40.02 per cent from 38.48 per cent. Electricity inflation remained negative at 0.43 per cent, but the contraction in electricity prices eased from 1.73 per cent in August.
The surge in fuel and power inflation comes after a period of moderation between May and August. This was primarily driven by the crude petroleum and natural gas category, where inflation eased from 61.51 per cent in May before seeing a sharp uptick in September.
Devendra K Pant, chief economist at India Ratings & Research, said WPI inflation reached a series high due to a broad-based increase across groups and adverse base effects across segments.
“Weak currency has also acted as a catalyst for high inflation. Going forward, adverse base effects would also keep pressure on wholesale prices at least until January next
year. The RBI’s actions over the weekend have helped the rupee recover, if this holds, it may help in limiting the spurt in inflation,” Pant said, adding that wholesale inflation may jump to over 12 per cent in October, and is likely to remain in double digit until February 2027.
For primary articles, inflation rose to 8.67 per cent in September, the highest in the new series, from 7.76 per cent in August. Within the group, food inflation jumped to a 21-month high of 8.14 per cent from 5.67 per cent in August, while minerals inflation rose to 9.51 per cent from 8.24 per cent, which more than offset the moderation in non-food inflation to 10.28 per cent from 14.79 per cent in August.
The rate for manufactured products, which carry a weight ing of 63.1 per cent, rose to
9.76 per cent — the highest in the current 2022–23 series. Within manufactured products, textiles, wearing apparel, chemicals and chemical products, basic metals, and electrical equipment witnessed a hardening in prices during the month. There was also a significant rise in inflation for computer, electronic, and optical products, which rose to 4 per cent after contracting for several months.
Core WPI, which strips out volatile food and fuel items, was also at its highest in the new series, rising to 9.8 per cent in September from 8.1 per cent in August, Sonal Badhan, economist at Bank of Baroda, said in a research note.
“Volatility in oil prices can also get heighted ahead of US mid-term elections. Further, as El Niño conditions continue to strengthen, food prices also face upside risks. All these factors are expected to maintain pressure on headline WPI in the near-term,” the note said.
The WPI food index, which combines primary food articles with manufactured food products, rose to a 23-month high of 8.66 per cent.
“While the sequential pace of hardening in food prices has softened in October against September, an adverse base would push up food inflation further in the ongoing month,” said Rahul Agrawal, principal economist at Icra, adding that Icra expects WPI inflation to inch up further to 12 per cent in this month, with the adverse base also “playing spoilsport.”
Source: Business Standard
