India’s inflation based on the Wholesale Price Index (WPI) rose further to 15.08 percent in April from 14.55 percent in March, according to data released by the commerce ministry on May 17.
The rise in wholesale inflation in April comes after data released on May 12 showed the more closely tracked headline retail inflation rate based on the Consumer Price Index (CPI) jumped to 7.79 percent in April – the highest since May 2014, or 95 months.
The report authored by Soumya Kanti Ghosh, group chief economic adviser, SBI, said inflation continues to be a bugbear and it appears unlikely to correct anytime soon.
The heatwave led to a spike in prices of perishables such as fruits, vegetables and milk, which, along with a spike in tea prices, pushed up primary food inflation.
Inflation was driven higher in April because of an across-the-board increase in sequential price pressures. The overall all-commodities index of the WPI rose 2.1 percent month-on-month, while the index for the fuel and power group was 2.8 percent higher in April compared to March.
The index for manufactured products – which account for 64.23 percent of the WPI basket – rose 1.7 percent in April from March.
With WPI inflation remaining in double-digits, the probability of a repo hike in the June monetary policy has risen further.
“We expect a 40 bps hike in June 2022 followed by a 35 bps rise in August 2022, amidst a terminal rate of 5.5% to be reached by mid-2023,” Aditi Nayar, the Chief Economist of ICRA, said.