Wholesale price inflation eased marginally in December but remained in double digits for the ninth month in a row, highlighting the price pressures in the economy. Data released by the department for the promotion of industry and internal trade (DPI) on Friday showed inflation, as measured by the wholesale price index (WPI), rose an annual 13.6% in December, slower than November’s increase of 14.2%. The rate of inflation in December 2020 was 1.9%.
“The high rate of inflation in December 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products, textile and paper, and paper products, etc as compared to the corresponding month of the previous year,” the commerce and industry ministry said in a statement.
Inflation in manufactured items was lower at 10.62 percent in December, against 11.92 percent in the previous month.
Data released by the National Statistical Office on Wednesday showed that retail inflation, as measured by the consumer price index (CPI), rose to a six-month high of 5.6 percent in December 2021.
As a consequence, inflation in the third quarter works out to just about 5 percent, marginally lower than the estimate of 5.1 percent projected by the Reserve Bank of India in the December monetary policy committee (MPC) meeting. However, worryingly, inflation is likely to inch upwards in the months ahead due to a combination of factors. First, the base effect is likely to remain unfavorable in the last quarter of the financial year.
Second, with producers increasingly facing cost pressures — the wholesale price index has remained elevated, witnessing a record high of 14.2 percent in November — they are likely to pass on the burden of rising costs to end consumers. And third, the possible disruption in supply chains, due to the imposition of restrictions on activities by state governments, could also push prices up.
The central bank also expects inflation to rise. In the December MPC meeting, it had pegged retail inflation to rise to 5.7 percent in the fourth quarter, perilously close to the upper threshold of the inflation-targeting framework.
Inflation in food articles, however, spiked to a 23-month high at 9.56 percent in December, against 4.88 percent in November. The vegetable price rise rate jumped to 31.56 percent, against 3.91 percent in the previous month.
In the food articles category, pulses, wheat, cereals, and paddy all witnessed a month-on-month price rise, while potato, onion, fruits and egg, meat, and fish saw some softening.
“The high rate of inflation in December 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products, textile and paper, and paper products, etc as compared to the corresponding month of the previous year,” the Commerce and Industry Ministry said in a statement.
Inflation in manufactured items was lower at 10.62 percent in December, against 11.92 percent in the previous month.
In the fuel and power basket, the rate of price rise was 32.30 percent in December, against 39.81 percent in November.
Data released earlier this week showed retail inflation based on Consumer Price Index (Combined) rose to 5.59 percent in December, from 4.91 percent a month ago as food prices inched up.
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