India’s wholesale price index (WPI)-based inflation rose to a four-month high of 14.55 per cent in March from 13.11 per cent in February, according to data released by the Commerce Ministry on April 18. WPI inflation for March 2021 is 7.89 per cent. Another 10%+ print means WPI inflation has been in double-digit territory for 12 consecutive months.

Wholesale inflation rose in March after data on April 12 showed that headline retail inflation, which is more closely tracked based on the consumer price index (CPI), jumped to a 17-month high of 6.95 per cent last month. While the Reserve Bank of India’s (RBI) policy target is based on CPI inflation, high WPI inflation is a precursor to higher consumer prices as producers pass on rising costs to customers.

The rise in WPI inflation in March was driven by an increase in prices across the board, although non-food items dominated. “The high inflation rate in March 2022 was mainly due to the disruption of global supply chains caused by the Russia-Ukraine conflict, which resulted in higher prices for crude oil and natural gas, mineral oil, base metals, etc.,” the Commerce Department said.

The WPI fuel and power index rose 5.68 per cent month-on-month in March, while the manufactured goods index rose 2.31 per cent year-on-year. Manufactured goods accounted for 64.23 per cent of the WPI basket. In contrast, the food index rose just 0.54 per cent in March from February. However, the month-on-month increase in March was higher than the 0.06 per cent increase reported in February.

Overall, the WPI All Commodities Index rose by 2.69 per cent month-on-month, up from 0.76 in February, indicating rising price pressure. The effects of the war between Russia and Ukraine appeared to be spilling over to non-fuel prices, with the March wheat index up 3.19 per cent from February. As a result, wheat inflation rose to 14.04 per cent from 11.03 per cent in February. Russia and Ukraine are the world’s major wheat exporters.