Wholesale inflation rises to 11-month high of 2.13% in February

Wholesale inflation for March

India’s wholesale inflation rose to an 11-month high of 2.13 percent in February from 1.81 percent in the previous month, data released on March 16 shows.

The increase broadly mirrors the recent trajectory in retail inflation. Consumer price inflation rose to 3.2 percent in February from 2.7 percent in the previous month, driven largely by faster increase in food prices.

Economists expect inflationary pressures to build in the coming months, as the Iran war pushed up fuel prices. Higher energy prices typically transmit through the economy by raising transportation, logistics and production costs, which, in turn, affect prices of everyday goods.

Wholesale inflation is particularly sensitive to such global commodity shocks because the Wholesale Price Index (WPI) includes a large share of fuel, metals, chemicals and other industrial inputs. A sustained increase in crude or energy prices can push WPI higher more quickly than consumer inflation.

Past episodes illustrate this vulnerability. During the global commodity price surge between April 2021 and December 2022, India’s wholesale inflation averaged around 12.4 percent, reflecting sharp increases in energy, metals and other industrial commodities.