Perspective on WPI data by Rajani Sinha, Chief Economist, CareEdge Ratings
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Below the Perspective On WPI data by Rajani Sinha, Chief Economist, CareEdge Ratings
‘WPI inflation rose sharply to 1.3% in April, continuing in positive territory for the sixth consecutive month. While manufactured products continued in deflation, albeit at a slower pace compared to last month, segments like wholesale food prices and fuel and power remained in positive territory. Wholesale inflation of fuel and power entered positive territory after 11 months in April. Brent crude oil prices had touched USD 90/bbl in April due to supply chain disruptions in the Middle East amid geopolitical conflicts. While Brent crude prices have moderated in the past couple of weeks, the recent uptick in global commodity prices, especially industrial metal prices, warrants close monitoring as it can result in higher input costs. Industrial metal prices have risen by ~20% in the past three months. Going ahead, the base effect will remain adverse over the next two months, thereby resulting in higher WPI inflation. External risks emerging from ongoing geopolitical tensions also need to be monitored, given the risk they can pose to supply chains.
Having said that, the outlook for food inflation has brightened due to anticipations of a normal monsoon, which is expected to bolster agricultural production. However, monitoring the monsoon's temporal and spatial distribution is critical. We expect WPI inflation to average around 3% in FY25.’
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