October 2021: Wholesale inflation hits 5-month high

Wholesale price-based inflation accelerated to a five-month high in October, led by a surge in prices of fuel, manufactured products and some increase in food items, highlighting the price pressures confronting the economy.

Inflation, as measured by the wholesale price index, rose an annual 12.5% in October, higher than the 10.7% in September and above the 1.3% recorded in October 2020.

This is the seventh consecutive month when WPI has been in double digits, while core inflation (which is minus food and fuel) shot up to a new all-time high of 11.9%. The WPI data comes close on the heels of the retail inflation data, which showed it rose marginally to 4.5% in October, largely on the back of higher prices of edible oil, price of services and an uptick in vegetable prices.

The WPI data showed the prices of fuel and power segment rose an annual 37.2% during the month, higher than the 24.8% in the previous month. The recent cut in excise duty and similar tax moves by states are expected to provide some relief to consumers in the months ahead.

Inflation in vegetables fell 18.5% in October, while prices of potatoes declined 51.3%. Onion prices fell 25% during the month. Economists said the price situation in vegetables should be interpreted with caution as a high base masks the actual movement of rates, which has inched higher in recent weeks due to the impact of high fuel prices and supply crunch triggered by unseasonal rains.

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