India's Dec wholesale price inflation sequentially eases to 13.56%

New Delhi, Jan 14: Lower prices of manufactured goods and fuel slightly eased India’s December 2021 wholesale inflation on a sequential basis. Accordingly, the annual rate of inflation, based on wholesale prices, rose to 13.56 percent from 14.23 percent reported for November 2021.

However, on a year-on-year (YoY) basis, the Wholesale Price Index (WPI) data furnished by the Ministry of Commerce and Industry has risen exponentially over December 2020, when it stood at 1.95 percent.

“The high rate of inflation in December 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas, chemicals and chemical products, food products, textile and paper and paper products, etc., as compared to the corresponding month of the previous year,” the ministry said in its review of ‘Index Numbers of Wholesale Price in India’ for December.

“The month over month change in WPI for the month of December 2021 stood at (-) 0.35 percent as compared to November 2021,” it added.

As per the data, the primary articles segment, which has one of the highest weightage in the WPI, increased at a faster rate of 13.38 percent in December 2021 as compared to 10.34 percent reported for November 2021.

In the fuel and power segment, which has a weightage of 13.15 percent, the rise in inflation was recorded at 32.30 percent, as compared to 39.81 percent in November 2021.

Similarly, cost of manufactured products, which has a weightage of 64.23 percent, increased at a slower rate of 10.62 percent from 11.92 percent in November 2021.

However, the growth rate of WPI food index consisting of food articles from the primary articles group and food products from the manufactured products group rose to 9.24 percent from 6.70 percent in the previous month.

“The WPI inflation printed in double digits for the ninth consecutive month, easing only modestly in December 2021 from November’s high, with a jump in primary food and non-food inflation absorbing a part of the correction in another item,” said Aditi Nayar, Chief Economist, ICRA

“The primary food inflation has spiked from the marginal 0.1 percent in October 2021 to an unpleasant 23-month high of 9.6 per cent in December 2021, reflecting the unfavorable base, particularly for vegetables,” Nayar added.

According to Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research: “The data indicates that the incremental price pressures in the primary article and the fuel segments have eased in the previous month, although a fresh rise in global crude prices can make such a relief temporary.

“As expected, there is a moderation in the wholesale food category driven by the seasonal drop in vegetable prices, including a sharp drop in onion and potato prices. While the pass-through of higher input costs to manufactured products has continued in December 2021, the sequential growth is low at 0.22 percent for that category due to the loss of momentum in demand recovery.”