WPI quickens to 2.03% after easing in December

Inflation in wholesale prices quickened to 2.03% in January, after easing to 1.2% in December 2020, led by a spike in manufactured products suggesting that producers were likely regaining pricing power, after the initial pandemic shock, amid rising commodity prices.

January’s Wholesale Price Index (WPI) numbers also point to a divergence between wholesale and retail price trends in the month as consumer price inflation had eased to 4.06% from 4.59% in December. The Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade also revised the wholesale inflation rate for November 2020 from 1.55% estimated provisionally, to 2.29%.

While a negative inflation rate was recorded for food items, primary articles as well as fuel and power, inflation in manufactured products accelerated to 5.13% in January, almost two percentage points faster than November’s 3.23% pace.

Inflation in fuel and power stood at -4.78%, which Care Ratings said could be ‘misleading’ as retail prices of fuels ‘have reached their peak levels’.

“Higher prices in manufactured products is positive for business,” Care said in a note. “The recovery in commodity prices can be linked with the unlocking process as producers have also made up for their inability to produce in the first two months of the year by increasing prices.”