WPI Inflation For March 2022 At A Staggering 14.55%

The Wholesale Price Index, or WPI, stood at 14.55% in March 2022 compared with 13.11% in February, according to data released by the Ministry of Commerce and Industry on Monday.

The high rate of inflation in March, 2022 is primarily due to rise in prices of crude petroleum and natural gas, mineral oils, basic metals, etc owing to disruption in global supply chain caused by Russia-Ukraine conflict.

"Beginning April 2021, the WPI inflation has remained in double-digit zone for twelve consecutive months. While inflation has seen an increase in the last couple of months with a rise of 1.59%, the food and commodity prices continue to harden. Additionally, the food Index increased from 8.47 percent in February 2022 to 8.71 percent in March 2022 due to the increase in the cost of cooking oil that touched a new peak due to the ongoing Russia-Ukraine conflict.

However, the reason for the high rate of inflation is primarily believed due to the rise in prices of crude petroleum, natural gas, mineral oils, and basic metals, owing to disruption in the global supply chain caused by the conflict. This will result in amplifying cost pressures, and disrupt supply across the world; majorly impacting crude oil prices followed by food inflation to remain benign on account of normal monsoon and a rise in fertilizer costs and international food prices. Faster growth in prices is bound to harden inflation expectations going forward; this has the potential of creating a vicious cycle of inflation and inflationary expectations feeding into and off each other," says DRE. Reddy, CEO and Managing Partner at CRCL LLP

The Food Index consisting of 'Food Articles' from Primary Articles group and 'Food Product' from Manufactured Products group have increased from 166.4 in February, 2022 to 167.3 in March, 2022. The rate of inflation based on WPI Food Index increased from 8.47% in February, 2022 to 8.71% in March, 2022.

The index for fuel and power increased by 5.68% to 146.9 (provisional) in March, 2022 from 139.0 (provisional) for the month of February, 2022. Prices of Mineral Oils (9.19%) increased in March, 2022 as compared to February, 2022.

Raghvendra Nath, Managing Director - Ladderup Wealth Management Private Limited, said: "WPI worsened further to 14.55% in March, being the 12th straight month where the inflation has stayed in double digits. This was the highest month on month WPI increase experienced by the economy since the WPI series began in 2004. The margins of companies across sectors may further face headwinds for at least next 2 quarters, owing to the Russia-Ukraine war as it continues to affect commodity and food prices, fresh set of restrictions if implemented due to the rising COVID cases can again be troublesome for the economy."