New Delhi, June 14 | Base effect, along with high transportation fuel cost, lifted India’s annual rate of inflation based on wholesale prices to record high levels in May.
Accordingly, WPI rose by 12.94 per cent in May from a rise of 10.49 per cent in April.
This is the highest rate of WPI inflation in the current series. The previous high mark was observed in April.
The monthly rate of inflation, in May 2020 stood at (-) 3.37 per cent.
On sequential basis, the month over month change in WPI index for May 2021 as compared to April, was 0.76 per cent.
“The high rate of inflation in May 2021 is primarily due to low base effect and rise in prices of crude petroleum, mineral oils viz petrol, diesel, naphtha, furnace oil etc and manufactured products as compared to the corresponding month of the previous year,” the Ministry of Commerce and Industry said in a statement on WPI.
Last year, the Centre had imposed a full nationwide lockdown to curb the spread of the Covid-19 pandemic.
On segment wise basis, prices of primary articles, which constitute 22.62 per cent of the WPI’s total weightage, rose at a slower rate of 9.61 per cent last month from 10.16 per cent in April 2021.
However, WPI food index rose to 8.11 per cent from 7.58 per cent reported for April.
The prices of manufactured items remained at elevated levels with a rise of 10.83 per cent from 9.01 per cent.
On the same note, the prices of fuel and power with a weightage of 13.15 per cent rose 37.61 per cent from 20.94 per cent.
Specifically, diesel prices increased by 66.3 per cent in May against 33.82 per cent during April.
During the same period, petrol prices rose by 62.28 per cent in May from 42.37 per cent.
Similarly, other key consumables such as potato became a bit expensive. Its prices deflated by (-) 27.9 per cent in May against (-) 30.44 per cent in April.
The vegetable prices in May fell (-) 9 per cent against a rise of 9.03 per cent.
In contrast, prices of pulses became dearer on a YoY basis by 12.09 per cent last month from 10.74 per cent.
“As expected, the YoY WPI inflation spiked further to a fresh-series high 12.9 per cent in May 2021, driven by the double whammy of high global commodity prices and a very low base,” ICRA Chief Economist Aditi Nayar.
“All the major sub-indices other than primary food articles, and crude oil and natural gas recorded a rise in their YoY inflation in May 2021 relative to the previous print.”
According to Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, high input costs are severely impacting the price cost margins of the businesses in the difficult time of pandemic coronavirus.
“High commodity prices are posing a serious challenge to the small businessesto operate in the difficult pandemic times, which needs to be addressed immediately through the adequate reforms in the supply chains of high price commodities,” he was quoted as saying in a statement.
“We suggest to do away with the custom duties on the imports of primary raw materials for industrial use for at least current FY 2022 and impose export duties on various primary commodities showing huge price increases, exceeding 50 per cent over the last FY 2021.”