This Article is From Jan 14, 2022

Wholesale Inflation Spikes By Over 13% In December On Rising Input Costs: 10 Points

Wholesale Inflation in December 2021: The rate of inflation based on the WPI food index stood at 13.56 per cent in December, compared to 1.9 per cent in the corresponding month last year

Wholesale Inflation Spikes By Over 13% In December On Rising Input Costs: 10 Points

WPI inflation stood at 13.56 per cent in December 2021, showed government data today

The rate of inflation, based on the monthly wholesale price index (WPI), stood at 13.56 per cent for December 2021, compared to 1.9 per cent in the corresponding month of 2020, government data showed on Friday, January 14. Along with this, retail inflation also rose to 5.59 per cent in December, tracking a sharp rise in food prices. The next WPI inflation data will be released after Budget 2022 - scheduled to be presented on February 1.

Wholesale Inflation In December 2021: All You Need To Know

  1. The country's annual wholesale price-based inflation eased marginally in December to 13.56 per cent, but remained in double digits for the ninth successive month, reflecting rising input costs for firms, higher price of mineral oils, basic metals, and crude petroleum, and natural gas.

  2. The WPI inflation in December 2021 was marginally lower than 14.23 per cent registered in the previous month (November 2021) - which was the highest in more than a decade, government data showed on Friday.

  3. The data for wholesale inflation - or the rate of increase in wholesale prices, comes at a time when the rising COVID-19 cases - including that of the Omicron variant, has posed a challenge to the country's economic growth. 

  4. The inflation in food articles also witnessed an uptick on a month-on-month basis at 9.56 per cent in December, against 4.88 per cent in November. The vegetable price rise rate spiked to 31.56 per cent, compared to 3.91 per cent in the previous month.

  5. The rising input costs for products such as fuel, metals and chemicals have pushed up wholesale prices, a proxy for the producers' prices, in recent months.

  6. Wholesale fuel and power prices in December rose 32.30 per cent, compared to 39.81 per cent in November, while manufactured product prices rose 10.62 per cent, compared to 11.92 per cent in the previous month.

  7. Retail inflation also rose to a five-month high of 5.59 per cent in December, tracking sharp rise in food prices. The headline retail inflation is hovering around five per cent, still within the Reserve Bank of India's median target of two per cent-six per cent target. 

  8. The central bank left the benchmark repo rate unchanged at four per cent for a ninth consecutive meeting last month as economic growth remains a challenge amid rising COVID-19 cases.

  9. The RBI - which mainly factors in retail inflation while arriving at its bi-monthly monetary policy, expects the inflation print to be somewhat higher over the rest of the year as base effects turn adverse.

  10. Analysts fear that rising Omicron cases, RBI's unwinding of easy liquidity and rising global crude oil prices could push domestic prices even higher in the next few months before easing in the second half of the year.

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