The inflation rate, based on the monthly wholesale price index (WPI), was 13.56 percent for December 2021, compared to 1.9 percent in the corresponding month of 2020, government data showed on Friday, Jan. 14. Retail inflation also rose sharply to 5.59 percent in December, reflecting the sharp rise in food prices. The data for wholesale inflation – or the rate of increase in wholesale prices – comes at a time when rising COVID-19 cases – including those of the Omicron variant – are challenging the country’s economic growth.
Wholesale inflation in December 2021: everything you need to know
The country’s annual wholesale price inflation declined marginally to 13.56 percent in December, but remained in double digits for the ninth straight month, reflecting rising input costs to businesses, higher prices of mineral oils, base metals and crude oil, and natural resources. gas.
WPI inflation in December 2021 was marginally lower than 14.23 percent recorded in the previous month (November 2021) – which was the highest in more than a decade, government data showed on Friday.
Inflation in food products also rose monthly to 9.56 percent in December, from 4.88 percent in November. Vegetable price increases peaked to 31.56 percent, compared to 3.91 percent in the previous month.
Rising input costs for products such as fuel, metals and chemicals have pushed up wholesale prices, a measure of producer prices, in recent months.
Wholesale fuel and power prices rose 32.30 percent in December, compared to 39.81 percent in November, while manufactured product prices rose 10.62 percent, compared to 11.92 percent in the previous month.
Retail inflation also rose to a five-month high of 5.59 percent in December, following the sharp rise in food prices. Overall retail inflation hovers around five percent, still within the Reserve Bank of India’s median target of two to six percent.
The central bank left the benchmark repo rate unchanged at four percent for a ninth consecutive meeting last month as economic growth remains a challenge amid mounting COVID-19 cases.
The RBI – which mainly takes retail inflation into account as it arrives at its bimonthly monetary policy – expects inflationary pressures to be slightly higher for the remainder of the year as base effects turn unfavorable.
Analysts fear soaring Omicron cases, RBI’s settlement of easy liquidity and rising global crude oil prices could push domestic prices even higher in the coming months, before falling in the second half of the year.
High food and vegetable prices remain a concern. Core WPI inflation of 11% is another concern, reflecting the stickiness of inflation. Going forward, industrial and commodity prices will drive WPI data. The latest mobility constraints caused by the third wave could also affect prices,” said DRE Reddy, CEO and Managing Partner at CRCL LLP.