Producers’ inflation, commonly known as Wholesale Inflation, surged above the 8 years high of 7.4% in March, covering 3 points more than February. The National Statistical Office (NSO) on Monday released the data for the Consumer Price Index (CPI) showing the rate of retail inflation jumping to four months high of 5.52%.

An increase in WPI will also impact the policy review, although the retail inflation data is primarily used in monetary policy decisions. With, both inflation indices being high, any possibility of the interest rate going down will be very unlikely. The RBI Governor earlier this month led the Monetary Policy Committee and decided to keep the policy rate unchanged, likely to continue with when it will meet again in June. According to a release issued by the Commerce & Industry Ministry, the wholesale inflation based upon the Wholesale Price Index (WPI) recorded surges largely on the account of higher fuel and metal prices. Moreover, the low base of March last year, having the data computed with a low response rate because of the nationwide lockdown, contributed to a spike in inflation in March 2021.

According to the statement, the prices of crude oil, petroleum products, and basic metal increased considerably in March 2021 wrt the corresponding month of last year. Also, because of the nationwide lockdown, the WPI index for the month of March 2020 (120.4) was computed with a comparatively low response rate. Inflation in the fuel and power basket was 10.25% in March, against 0.58% in February, mainly due to the rising prices of petrol and diesel. Inflation in food articles in March was 3.24% as prices of pulses, fruits and paddy increased. In vegetables, the rate of price rise was (-) 5.19%, against (-) 2.90% in the previous month. The inflation in pulses was 13.14% in March, while in fruits it was 16.33%.