Economists foresee rise in WPI inflation due to geopolitical situation, crude & metal prices, and heat wave

Chennai, April 15 (IANS) – The Wholesale Price Index (WPI) inflation rose to 0.53 per cent in March due to higher food prices, but a positive outlook for agricultural production and food inflation is expected, according to a top economist at CARE Ratings. Chief Economist Rajani Sinha stated that WPI inflation will likely increase in the coming months.

The Ministry of Commerce & Industry reported that WPI inflation for March increased by 0.53 per cent compared to the same month last year. The Ministry attributed the rise in inflation to higher prices of food articles, electricity, crude and natural gas, machinery, and equipment, among other factors.

Sinha explained, “With the fading of a supportive base, it is anticipated that the WPI inflation will edge up in the upcoming months. The recent increase in global commodity prices, particularly driven by higher Brent crude prices and a rise in industrial metal prices, is expected to add to the upward pressure on WPI.”

She also highlighted the positive outlook for agricultural production and food inflation, citing expectations of a normal monsoon and a recovery in rabi sowing. However, geopolitical tensions in the Middle East could impact the situation.

Commenting on the WPI inflation numbers, Bank of Baroda Economist Sonal Badhan noted a build-up in all three major sub-heads – food, fuel, and manufactured products. Badhan mentioned that food inflation accelerated to 4.6 per cent in March, with pressure seen in cereals, vegetables, fruits, and other items. Additionally, manufactured inflation increased, led by basic metals.

Overall, while WPI inflation is expected to rise in the coming months, factors such as global commodity prices, agricultural production outlook, and geopolitical tensions will play a crucial role in shaping the inflation trajectory.