India's wholesale inflation hits 13-month high in April, here is what experts say

Business Wednesday 15/May/2024 06:59 AM
India's wholesale inflation hits 13-month high in April, here is what experts say

New Delhi: India's wholesale inflation rose to a 13-month high of 1.26 per cent in April 2024 (-0.8 per cent in April 2023) from 0.5 per cent in March 2024, led by fuel, food and core items, official data from the commerce ministry showed on Tuesday.

Experts said that despite global headwinds, the trajectory of WPI inflation in fuel and power remained low during April but the food inflation is still high.

"Supported by negative inflation in the Non-Food Articles (-4.41 per cent) and manufactured products (-0.42 per cent) the WPI inflation remains benign. However, the WPI inflation in food articles remains elevated at 7.74 per cent in April 2024 as compared with 6.88 per cent in March 2024" said Sanjeev Agrawal, president, PHD Chamber of Commerce and Industry.

The experts said that with the monsoon expected to be above normal, it will help in easing food inflation in the coming months.

"Food inflation was higher largely due to an increase in vegetables which is generally observed every summer. With normal monsoon forecast this year, food inflation is likely to be lower, lowering the overall inflation. Core inflation number at ~ 3.25 pc continues to remain subdued. This inflation number may not have any material impact on RBI monetary policy decision" stated Deepak Agrawal - CIO Debt, Kotak Mutual Fund.

Experts further highlighted that the pressure on food prices has been interrupting the disinflation process in India, and posing a challenge for the lowering of inflation trajectory to the 4 per cent target, as per the RBI's monetary policy target.

The industry experts also pointed out that while crude inflation has moderated recently after peaking in April, the surge in the commodity market may affect the growth of businesses and the inflation can surge further.

ICRA (Investment Information and Credit Rating Agency) projects WPI inflation to harden further to 2.0-3.0 per cent in May 2024, amid the widening of the unfavourable base for items like food and crude oi.