India’s annual rate of inflation based on wholesale prices rose to over a three-year high of 6.55 per cent in February owing to costlier food and fuel, from 5.25 per cent in the previous month, even as February’s retail inflation also climbed over the previous month to 3.65 per cent, official data showed on Tuesday.
According to the Wholesale Price Index (WPI) data released by the Commerce and Industry Ministry, the annual inflation rate was (-)0.85 per cent in February 2016.
The wholesale inflation for food articles rose by 2.69 per cent during the month under review from (-)0.56 per cent in January.
However, expenses on primary articles, which constitute 20.12 per cent of the WPI’s total weight, rose by 5 per cent during February.
The wholesale inflation rate for onion was lower by (-)18.85 per cent and that for potatoes stood at (-)8.84 per cent. Overall, vegetable prices came down by (-)8.05 per cent.
The inflation rate for pulses stood at (-)0.79 per cent, while wheat became expensive by 8.36 per cent and protein-based food items such as eggs, meat and fish became dearer by 3.79 per cent.
Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise by 3.66 per cent.
The prices in this category had risen by 3.99 per cent in January.
The sub-category of manufactured food products registered a rise of 9.27 per cent.
This was mainly caused by a spurt in sugar prices, which rose by 21.22 per cent as a result of production shortages. Edible oils rose by 5.70 per cent.
Similarly, fuel and power price inflation accelerated in February. It edged up by 21.02 per cent, as compared to a rise of 18.14 per cent reported during January.
Segment-wise, the price of high-speed diesel rose by 33.14 per cent last month while that for gasoline or petrol climbed by 16.72 per cent and for LPG by 4.32 per cent.
The Commerce Ministry also revised the December 2016 WPI inflation rate to 3.68 per cent from the earlier provisional reporting of 3.39 per cent.
In this regard, the Reserve Bank of India’s six-member monetary policy committee (MPC) was unanimous in its concern about inflation when holding rates in February. At its sixth and final monetary policy review of the fiscal, the RBI kept its short-term lending rate for commercial banks unchanged at 6.25 per cent, while changing its policy stance from “accommodative” to “neutral”.
MPC members were unanimous in the decision to keep the policy rate unchanged, with all six citing concerns that inflation could quickly accelerate and threaten the RBI’s medium-term target of 4 percent.
The minutes of the MPC meeting showed that the committee was of the view that excluding food and fuel, inflation has been unyielding at 4.9 per cent since September 2016.
“The Committee is of the view that the persistence of inflation excluding food and fuel could set a floor on further downward movements in headline inflation and trigger second-order effects.”
The average level of retail inflation in 2015-16 was at 4.9 per cent.