Inflation in the country has skyrocketed and today’s wholesale inflation figures are a testament to this. Wholesale inflation rose to 15.88 percent in May. Wholesale price inflation was 15.08 percent in April. Let me tell you that in April alone, wholesale inflation reached over 15 percent and reached a 9-year high. It is the highest under the current series launched in 2012, government data showed.
Wholesale price-based inflation (WPI) rose to a record 15.88 percent in May from a year ago, its highest in the current series launched a decade ago, on rising prices of food items and crude oil, government data showed on Tuesday. That suggests despite a softer reading in May’s retail price pressures data on Monday, it would be too early to call a peak in inflation. WPI has held above double-digit rates for 14 straight months now, rising in each of the previous three months since the Russia-Ukraine war.
“The high rate of inflation in May is primarily due to rise in prices of mineral oils, crude petroleum & natural gas, food articles, basic metals, non-food articles, chemicals & chemical products and food products compared to the previous year,” the Commerce and Industry Ministry said. May 2021 had recorded an inflation rate of 13.11%.
Inflation in food articles in May was 12.34 percent, as prices of vegetables, wheat, fruits, and potato witnessed a sharp spike over the year-ago period. The rate of price rise in vegetables was 56.36 percent, while in wheat it was 10.55 percent, and an egg, meat, and fish, inflation was 7.78 percent. In the fuel and power basket, inflation was 40.62 percent, while in manufactured products and oil seeds, it was 10.11 percent and 7.08 percent, respectively. Inflation in crude petroleum and natural gas was 79.50 percent in May.
Retail inflation in May was 7.04 percent, remaining above the Reserve Bank’s inflation target for the fifth straight month. To tame stubbornly high inflation, the RBI hiked its key interest rate by 40 basis points in May and 50 basis points in June. The central bank, last week, also raised the inflation projection by 100 basis points to 6.7 percent for 2022-23.
The only category of items to see a slight dip in inflation was Manufactured products, where the wholesale price rise pace was 10.11% in May compared to 10.85% in April. Indeed the latest reading of WPI combined with retail inflation data from Monday indicates supply-driven inflation is here to stay. The repo rate is the rate at which RBI lends money to commercial banks and the latest inflation data suggests interest rates are set to keep rising.