The wholesale price index (WPI) based inflation has been rising for three months in a row. It was 1.3% in the previous month and (-) 3.6% in May 2023.
“Positive rate of inflation in May, 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc,” the ministry of commerce & industry said in a statement on Friday.
The May WPI print is at a 15-month high. The last high was seen in Feb, 2023, when inflation was 3.9%.
As per the data, inflation in food articles rose to a 10-month high of 9.8% in May.
Inflation in vegetables was 32.4% in May, up from 23.6% in the previous month. Onion inflation was at 58.1%, while potato was 64.1%. Pulses inflation rose nearly 22% in May. Bank of Baroda economist Aditi Gupta said food inflation is also likely to remain elevated due to severe heatwave in the country. Progress of the monsoon will play a key role in determining the trajectory of food inflation going forward.
“With severe heatwave conditions persisting in several parts of the country, prices of vegetables and fruits are witnessing an upward momentum even in June 2024 and are likely to keep inflation elevated in the near-term,” Gupta said.
Besides, an uptick in global metal prices has contributed to an increase in inflation in the manufacturing category. In manufactured products, inflation was at 0.8% in May, higher than (-) 0.4% in April.
Barclays economist Shreya Sodhani said sequentially, the price index for manufacturing (which has the highest weight in the WPI, at 64%), has risen sequentially for the fourth straight month, indicating that firms’ input costs are rising.
ICRA chief economist Aditi Nayar said the core-WPI (non-food manufacturing WPI) reverted to the inflationary territory in May 2024 after a gap of 14 months. This alone contributed as much as 57 bps to the 130 bps uptick in the headline print compared to April 2024.
In the fuel and power basket, inflation stood at 1.35%, marginally lower than 1.38% in April. agencies
