Wholesale inflation rises to 13.11% in February

Nomura revises India GDP, inflation forecasts, sees oil at $125/barrel in worst case

Inflation for manufactured products, which accounts for 64.23 percent of the WPI basket, increased to 9.84 percent in February from 9.42 percent in the previous month. Primary articles prices decreased to 13.39 percent from 13.87 percent, while inflation for fuel and power group was higher to 31.50 percent from 32.27 percent.

Upasna Bhardwaj of Kotak Mahindra Bank said, "Clearly these numbers are quite discomforting, we were looking at about 12.1 percent headline WPI so this is significantly higher. Again, it is higher on account of non-food items from what I see. Because weighted food index seems to be 0.1 percent up, like you said, so that is in line with our expectations. So it is again, the core inflation, which is driving it up."

"Clearly, the risks are more and more skewed on the upside with every passing month. Notably last year, February, March and April, on average, we did see nearly 1.4-1.5 percent month-on-month increase in the index and that probably looks to be the case now going forward also. We were expecting that the WPI pre the war situation to have peaked out clearly, that's not going to be the case anymore. We would be seeing higher numbers here and accordingly, the pass-through also will be sustained into the CPI headline numbers that we will be seeing in the subsequent months."

On CPI numbers, she said, “We were earlier looking at crude oil prices to average around $80- $85 a barrel next year that has been revised up to about $100 a barrel. So our full year trajectory was averaging around 5 percent CPI, which has been moved up by about 50 basis. So 5.5- 5.6 percent is where we are right now. So that has been about 50-60 basis of upward addition to our CPI trajectory.”

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Meanwhile, the RBI in its recent monetary policy meeting kept its key repo rate at 4 percent to support growth.

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Retail inflation data for January, released last month, breached RBI's upper tolerance band of 6 percent for the first time since June. Retail inflation accelerated due to high food prices and manufactured goods.