India's wholesale inflation gets a crude awakening
Live Events What is new in India's WPI new series Transition from WPI to PPI as a Reliable and Trusted News Source Addas a Reliable
Live Events What is new in India's WPI new series Transition from WPI to PPI as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India's wholesale inflation stood at 9.68% in May under a new series, while food and fuel prices stayed at elevated levels amid the continuing Middle East tensions due to the US-Iran war that inflated global crude prices and strained supply chains.India's wholesale inflation had accelerated to a 42-month high of 8.26% in April under the old series. A Reuters poll of economists had forecast a 9.05% annual increase in wholesale prices for May.India's wholesale food prices stood at 4.49% in May while fuel and power prices surged 30.33% in May.The food index was at 3.11% in April and fuel and power wholesale inflation was at 24.89%, according to the latest release.Inflation in crude petroleum and natural gas shot up 61.51%.India's state-run fuel retailers raised fuel prices four times in May, lifting transport costs. A sustained rise in energy prices could widen India's current-account deficit, weigh on the rupee and add to inflationary pressures in the world's third-largest oil importer.
A below-normal monsoon, meanwhile, risks lifting food prices later this year, complicating the inflation outlook."The surge underscores India’s exposure to external energy price shocks, with global crude markets continuing to be driven by geopolitical tensions. Going forward, the overall impact will largely depend on the trajectory of oil prices amid the evolving geopolitical situation," said Shashwat Singh, Fundamental Analyst, Bajaj Broking.Higher energy costs also pushed up prices at the factory gate.Inflation in manufactured products accelerated to 7.48% in May, driven by rising prices of chemicals, textiles, machinery and basic metals. Inflation in basic metals climbed to 12.3%, while chemicals and chemical products recorded inflation of 13.4% in May. Wholesale inflation in textile manufacturing surged 10.22%.On Monday, the government also launched a new producer price index (PPI) series and unveiled a wholesale price index (WPI) with an updated base year, in a significant overhaul of its inflation tracking framework. The base year for the WPI has been revised from 2011-12 to 2022-23 and expands the number of commodities covered to 957 from 697.India relies on the WPI as a key gauge of producer-level inflation. However, the introduction of the PPI aligns India more closely with global statistical standards and, over time, will help policymakers better adjust economic growth data for inflation.
The BriefWire