India’s wholesale inflation surged to its highest level in over two years in February, driven by a broad-based rise in commodity and manufactured goods prices. According to official data from the Ministry of Commerce and Industry, the Wholesale Price Index (WPI) inflation climbed to 4.17% in February 2021, up from 2.03% in January and significantly higher than 2.26% recorded in February last year.
Segment-Wise Breakdown
- Primary Articles (22.62% weightage): Inflation in this category rose to 1.82% from a contraction of 2.24% in January.
- Food Index: Prices of food items turned positive, increasing 3.31% in February compared to a marginal fall in January. While pulses rose 10.25% year-on-year, vegetable prices fell by nearly 3%, with potato prices plunging almost 30%.
- Manufactured Goods (64.23% weightage): Prices continued to remain high, rising 5.81% in February against 5.13% in January, reflecting higher input costs for industries.
- Fuel and Power (13.15% weightage): This segment saw a mild 0.58% annual increase after months of contraction, supported by higher mineral oil prices (+8.88%). Electricity prices declined slightly, while coal remained flat.
Analysts’ Take
Economists noted that the rise was sharper than anticipated. “WPI inflation surged to 4.2% in February, exceeding our forecast of 3.9%. This was largely due to higher global commodity prices and firming crude oil costs, along with a fading base effect in food items,” said Aditi Nayar, Principal Economist at ICRA.
Suman Chowdhury, Chief Analytical Officer at Acuite Ratings & Research, added that while fuel inflation is still subdued on an annual basis, the global oil rally could soon push this category into double digits. He also highlighted that core inflation touched 5.5%, the highest in the current data series, underlining mounting cost pressures on the back of India’s manufacturing-led economic rebound.
Outlook
Economists expect wholesale inflation to remain elevated in the coming months as global commodity markets strengthen and domestic demand recovers. The higher WPI print also raises concerns about spillover effects into retail prices, complicating the Reserve Bank of India’s monetary policy stance.
