India's Wholesale Price Index (WPI) Trends
India's Wholesale Price Index (WPI) inflation rose to 2.13% year-on-year in February, marking an 11-month high, driven by increased costs of primary goods including food and non-food articles.
Current Inflation Trends
- WPI inflation increased from 1.8% in January.
- Expected to continue rising due to high input costs and geopolitical tensions.
Factors Influencing WPI Inflation
- Energy prices are expected to drive further increases in WPI inflation.
- ICRA and India Ratings forecast WPI inflation to rise to 3.2% and 3.7% respectively in March.
- CareEdge Ratings projects WPI inflation around 3.5% in FY27, assuming Brent crude prices average between $60 and $70 per barrel.
Crude Oil Price Predictions
- Goldman Sachs predicts Brent crude to settle in the 'low 70s' per barrel later in the year if geopolitical tensions ease.
Retail Inflation
- Retail inflation increased to 3.2% in February from 2.7% in January, influenced by the low-base effect and rising food prices.
Manufactured Goods
- Manufactured goods, which form 64.23% of the WPI basket, saw inflation rise to 2.92% in February from 2.86% in January.
- Price increases were noted in 16 of 22 sub-groups, notably:
- Basic metals: 4.4%
- Textiles: 3.3%
- Food products: 1.1%
- Chemical products: 0.7%
Comments from Economists
- Rajani Sinha, CareEdge Ratings: Emphasized the pressure from energy prices on WPI inflation.
- Madan Sabnavis, Bank of Baroda: Highlighted how metal price revival and the low-base effect increased input costs.
