The wholesale price-based inflation surged to a record high of 14.23 per cent in November, mainly due to hardening of prices of mineral oils, basic metals, crude petroleum and natural gas.
Wholesale Price-based Index (WPI) inflation (Base Year: 2011-12) has remained in double digits for eight consecutive months beginning April.
In October this year, WPI was at 12.54 per cent while in November 2020, it was at 2.29 per cent.
”The high rate of inflation in November 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum & natural gas, chemicals and chemical products, food products etc as compared to the corresponding month of the previous year,” the Ministry of Commerce and Industry said in a statement on Tuesday.
Inflation in fuel and power basket was higher at 39.81 per cent in November as against 37.18 per cent in October. The food index more than doubled to 6.70 per cent as compared to 3.06 per cent in the previous month.
Crude petroleum inflation was at 91.74 per cent during the month under review as against 80.57 per cent in October. However, inflation in manufactured items saw moderation at 11.92 per cent from 12.04 per cent in October.
”Headline WPI inflation rose to a series high of 14.23 per cent Year on Year (YoY) in November, up from 12.54 per cent YoY in October 2021. On a month-on-month basis, the increase of 2.73 per cent is the highest in the series” Yes Bank said in a report.
According to a senior ministry official, fuel and power have been the biggest contributors of the higher inflation rate as it is almost 40 per cent higher than November 2020.
The international commodity prices and fuel prices have also been very high.
Countries which traditionally have reported low inflation rates like the US have also now reported record inflation levels due to these global effects, the official said, adding that countries like Italy, Spain, Germany and even Singapore are having around 20 per cent inflation.
Primary articles and manufacturing products were barely touching double digits in spite of low base effects showing the efforts of Indian manufacturers, producers and industry, the official noted.
Terming the spike in the WPI inflation to an all time high of 14.2 per cent as a shock, ICRA Chief Economist Aditi Nayar said most non-core categories have exhibited an inflation rate much steeper than expected.
The unseasonal surge in vegetable prices as well as a rise in the inflation for egg, meat and fish, and condiments and spices underpinned the turnaround in the primary food inflation to a 13-month high of 4.9 per cent in November from a disinflation of 1.7 per cent in the previous month, she said.
According to her, a falling base is likely to push up the inflation rate for primary food articles further in the current month in spite of an anticipated sequential moderation in prices of various food items.
The inflation for headline and core-WPI, and fuel and power printed at an all-time high levels in November 2021, Nayar said.
The data released on Monday showed that retail inflation based on Consumer Price Index (Combined) rose to a three-month high of 4.91 per cent in November from 4.48 per cent a month ago as food prices inched up.
The Consumer Price Index (CPI) based inflation, however, remained within the comfort zone of the Reserve Bank of India. The government has mandated the central bank to keep inflation at 4 per cent (+/- 2 per cent).
The Monetary Policy Committee in its recent assessment retained its retail inflation forecast at 5.3 per cent for the current fiscal.
Last week, RBI Governor Shaktikanta Das said the headline inflation would peak in the fourth quarter of the current fiscal.