After retail inflation, wholesale inflation has also shown its attitude. According to data released by the government on Monday, wholesale inflation in India reached its highest level in 11 months in February. The main reason for this is the increase in prices of manufactured goods and some primary products. Whereas fuel prices were still seen in the negative range. Inflation based on Wholesale Price Index (WPI) increased to 2.13 percent in February, which was 1.81 percent in January and 0.96 percent in December. This is a sign of gradually increasing price pressures across the economy. This positive rate of inflation was mainly due to increase in prices of other manufacturing, manufacture of basic metals, non-food products, food products and clothing etc.
Increase in manufactured products
Manufactured products — which have the highest weightage in the WPI basket — were the biggest contributors to the rise in wholesale inflation in February. Inflation in this category increased to 2.92 percent in February, which was slightly higher than 2.86 percent in January and 2.03 percent in December. Food inflation increased to 1.85 percent in February, whereas it had increased by 1.41 percent in January.
Increase in primary products
Inflation in primary products – which includes agricultural products and minerals – rose sharply to 3.27 per cent in February on an annual basis, from 2.21 per cent in January and only 0.21 per cent in December. Despite an annual increase, the category actually saw a decline of 0.52 per cent on a month-on-month basis. The decline was mainly due to decline in prices of food articles (1.33 per cent decline) and minerals (1.21 per cent decline), although crude petroleum and natural gas prices increased by 4.17 per cent and non-food products by 0.83 per cent during the month.
Fuel and electricity price
Fuel and electricity prices, despite a slight recovery on a month-on-month basis, remained a drag on wholesale inflation. Inflation in this category remained in the negative zone i.e. 3.78 percent in February, although this decline was slightly less severe as compared to 4.01 percent in January. In December, fuel inflation was 2.31%. However, on month-on-month basis, the fuel and power index increased by 1.17 per cent.