High fuel prices, particularly that of diesel, lifted India’s wholesale price index to its highest level since the Narendra Modi government took power almost three years ago.
On an overall level, wholesale price of various items jumped 6.55% in February when compared with the prices of the same basket of commodities in the same month last year.
The inflation rate of 6.55% is the highest reading since November 2013 — a period of 39 months.
However, the increase was largely due to sharp increase in the price of fuel, particularly petrol and diesel, rather than ‘primary commodities’ such as food articles.
Out of the 6.55 percentage points of increase, 3.15 percentage points were contributed by fuel prices alone, while 2.37 percentage points was contributed by ‘manufactured items’ and only the remaining 1 percentage point was caused by higher prices for ‘primary articles’ such as food.
YEAR ON YEAR
The sharpest increase in prices was seen in diesel.
The price of diesel shot up 33.14% in one year due to the government’s policy of increasing its price by a very small amount every month to achieve parity between the cost price and the selling price of the commodity.
Moreover, the price crude oil also increased in the last one year, which pushed up petrol prices.
Petrol prices were up 16.7% on year. Prices of liquefied petroleum gas also rose 4.3% on year.
Prices of food articles — part of ‘primary articles’ — rose 2.7% on year, lifted by an 8.4% increase in the price of wheat and a 4.4% increase in the price of rice.
Fruit prices were up 7.1%, while vegetable prices fell 8% on year.
Compared to December 2013, when the inflation rate started slowing — eventually slipping into negative territory through much of 2015 and 2016 — overall prices in February were only 3.5% higher.
In other words, whole sale prices had risen only 3.5% compared to what they were nearly 40 months ago.
During these this three-year period, the prices of primary articles increased 6.0%, that of fuel fell 3.5% and that of manufactured goods increased 4.5%.
Primary articles have a weightage of 20.11% in the WPI, while fuel has a weightage of 14.91% and manufactured items account for the remaining 64.97%.