India’s wholesale inflation quickened to a five-month high of 12.54% in October from a year ago, as higher energy and power costs stoked broad-based prices, from basic non-food items to cars, official data released on Monday showed.
The surge in the wholesale price index or WPI, which measures what producers charge retailers, follows a rise in retail prices. Last week, the consumer price index for October came in at 4.48%, compared to a 4.35% rise in September.
Monday’s data showed core wholesale inflation, which excludes volatile categories of food and energy, and is an indicator of how entrenched prices are, touched an all-time high of 11.9% in October.
A global supply squeeze has weighed on prices in several key economies, with the US consumer inflation hitting a three-decade high in October, prompting analysts to expect more than a transitory phase of globally elevated prices.
Supply and shipping constraints, rising demand for goods and services as well as higher wages weigh heavily on the global economy. These developments have been a drag on the Indian economy, too, which imports key raw materials and components to meet internal demand.
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A shortage of semiconductors, or the ubiquitous chip, has crippled the production of a range of goods, from cars, appliances, and mobile phones to television sets.
Chipmakers are struggling to make enough of the vital component and there are no quick fixes, analysts say. That could mean Indian factories and consumers are buckling up for higher costs, already evident during Diwali sales.
The latest data showed wholesale inflation in manufactured products, the biggest category in the WPI index, climbed 12.04% in October, compared with a rise of 11.41% in September.
Prices continued to be driven by higher energy costs. According to the WPI data, fuel and power inflation surged 37.2% in October against a 24.8% rise in September.
Food inflation, though still subdued, increased to 3.1% in October from 1.1% in September due to the high inflation in edible oils and fruits. “Edible oil inflation at 32.6% in October 2021 continues to be very high, but has declined from the record 51.9% in May 2021 due to import duty cuts and the arrival of Kharif crop,” said Sunil K Sinha, principal economist, India Ratings and Research Ltd.
Indians spent a staggering ₹1.25 lakh crore on consumer goods during the Diwali festive blitz, according to the Confederation of All India Traders. But they faced a shortage of home appliances and electronics, which were priced higher by up to 12% compared to a year ago, according to data from the Consumer Electronics and Appliances Manufacturers Association