Wholesale Inflation Hits 11-Month Peak in February, Reaches 2.13%

India's Wholesale Inflation Hits 11-Month High

Key Figures:

• Wholesale inflation: 2.13% (February 2024)
• Consumer price inflation: 3.2% (February 2024)
• Previous wholesale inflation: 1.81% (January 2024)
• Previous consumer price inflation: 2.7% (January 2024)

India's wholesale inflation has reached an 11-month high of 2.13% in February, up from 1.81% in the previous month, according to data released on March 16. This increase mirrors the recent trajectory in retail inflation, driven largely by a faster increase in food prices.

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Consumer Price Inflation Rises to 3.2%

The Consumer Price Index (CPI) rose to 3.2% in February from 2.7% in the previous month. Economists expect inflationary pressures to build in the coming months, as the Iran war pushes up fuel prices. Higher energy prices typically transmit through the economy by raising transportation, logistics, and production costs, which, in turn, affect prices of everyday goods.

Wholesale Inflation Vulnerability to Global Commodity Shocks

Wholesale inflation is particularly sensitive to global commodity shocks because the Wholesale Price Index (WPI) includes a large share of fuel, metals, chemicals, and other industrial inputs. A sustained increase in crude or energy prices can push WPI higher more quickly than consumer inflation. Past episodes illustrate this vulnerability, with India's wholesale inflation averaging around 12.4% between April 2021 and December 2022, reflecting sharp increases in energy, metals, and other industrial commodities.

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