Globally, inflation has emerged as a major risk after the war in Ukraine and the breakdown in supply chains due to the geopolitical conflict and the strict lockdown in China. Central banks across the world have raised interest rates to stamp out price pressures.
The Reserve Bank of India has raised rates by 90 basis points in two tranches and more hikes are in the offing. India’s Wholesale Price Index has been in double digits for 14 consecutive months, highlighting the entrenched price pressures.
The high rate of inflation in May 2022 is primarily due to rise in prices of mineral oils, crude petroleum and natural gas, food articles, basic metals, nonfood articles, chemicals and chemical products and food products as compared to the corresponding month of the previous year, according to an official statement.
The recent data, released by the department for promotion of industry and internal trade (DPIIT), showed food inflation at 10.9% was the highest since the 11. 2% recorded in December 2019. There was a sharp rise in inflation of vegetables (56. 4%), potatoes (24. 8%), fuel and power (40. 6%), and manufactured products (10. 1%). The WPI data comes close on the heels of the retail inflation number for May, which displayed some easing from a near eight-year high of 7. 8% in April to 7% in May. Economists said the WPI inflation came in at 15. 9% in May despite a high base, unlike the CPI number which was lower due to base effect.