India’s wholesale inflation accelerated sharply to a 42-month high of 8.3 percent in April from 3.88 percent in March, driven by soaring crude oil, fuel and manufacturing costs.
Data released by the Department for Promotion of Industry and Internal Trade (DPIIT) on Thursday showed fuel and power inflation jumping to 24.71 percent in April from 1.05 percent a month earlier, emerging as the biggest driver of wholesale price inflation.
Crude petroleum and natural gas inflation surged to 67.18 percent year-on-year, while crude petroleum alone recorded inflation of 88.06 percent. Sequentially, crude petroleum and natural gas prices rose 16.42 percent during the month.
The spike in global energy prices is now feeding directly into factory-gate costs and industrial raw materials, raising concerns over pressure on corporate margins and a possible spillover into retail inflation.
Gaura Sen Gupta, chief economist at IDFC First Bank, said the sharp rise in wholesale inflation was largely fuel-driven, with the consolidated fuel index surging around 31 percent in April after a 6 percent rise in March.
She noted that core wholesale inflation was also rising, reflecting higher prices in steel, chemicals and minerals in line with global commodity trends.
Economists warned that rising input costs could begin affecting corporate earnings in the April-June quarter.
Key concerns include:
Industrial raw materials index jumped 17.8 percent after a 3.6 percent rise previously
Manufactured products inflation climbed to 4.62 percent from 3.39 percent
Fuel and power inflation soared to 24.71 percent
Rising costs are spreading across metals, chemicals, textiles and machinery sectors
The commerce and industry ministry said the sharp rise in wholesale inflation was mainly due to higher prices of mineral oils, crude petroleum and natural gas, basic metals, manufactured products and non-food articles.
Transport fuel inflation also accelerated during April.
Petrol inflation rose to 32.40 percent
High-speed diesel inflation climbed to 25.19 percent
Madan Sabnavis, chief economist at Bank of Baroda, said wholesale inflation is likely to remain elevated unless international crude oil prices correct significantly.
He added that while WPI inflation is not directly targeted by the RBI’s Monetary Policy Committee, rising wholesale prices eventually feed into consumer inflation through higher input costs.
Primary articles inflation rose to 9.17 percent from 6.36 percent in March, while the WPI food index increased to 2.31 percent from 1.85 percent.
Among food items:
Vegetables inflation stood at 0.53 percent
Onion prices remained in deflation at -26.45 percent
Potato inflation stayed negative at -30.04 percent
Eggs, meat and fish inflation came in at 6.68 percent
Milk inflation stood at 2.56 percent
Manufactured products inflation rose further, indicating wider transmission of higher raw material costs into factory prices.
Out of 22 manufacturing groups, 21 recorded price increases during April. Key sectors witnessing higher prices included:
Basic metals
Chemicals and chemical products
Textiles
Food products
Machinery and equipment sectors