Prices of almost all commodities have accelerated in the past few weeks in the Indian market amid the global surge in fuel and food prices further exaggerated by the controversial policies adopted by the incumbent government. Wholesale price index (WPI), which was at 7.89% in March 2021, increased to a record high of 14.9% in November 2021 and hung at 14.3% in December last year, thereafter it subsided below the 14% mark in January and February of 2022, however, the Ukraine crisis fuelled it to a high of 14.55% again in March.
The wholesale food price index also shot up to 8.71% in March from 8.47% in February. Manufactured products inflation also surged from 9.84% to 10.71%. Crude petroleum rose by a staggering 83.56% in March, accumulating to a fuel inflation rate of 34.52% during the month. Cereals changed from 6.07% in February to 8.12% in March while wheat also saw an increase from 11.03% in February to 14.04% in March keeping in mind Russia and Ukraine are the biggest exporters of wheat globally.
In a statement, Department for Promotion of Industry and Internal Trade mentioned, “The high inflation this March was attributed ‘primarily to rise in prices of crude petroleum and natural gas, mineral oils and basic metals owing to disruption in global supply chain caused by Russia-Ukraine conflict.”
Chief economist of Information and Credit Rating Agency (ICRA) Aditi Nayar said, “We expect the inflation measured by WPI to remain in the range of 13.5-15% in the month of April. This will partly depend on where crude oil prices settle in the rest of April and how much petrol and diesel prices are revised further. The broad-based nature of the rise in WPI inflation is likely to be of particular concern to the Monetary Policy Committee. We see a growing probability of the first repo hike being advanced to June.”
The Reserve Bank of India (RBI) in a note said, “India has managed the pandemic well and economic activity is picking up momentum, but these gains are at a risk from disruptive spill overs from geopolitical hostilities.”