NEW DELHI (Reuters) – India’s wholesale prices accelerated at the fastest pace since at least April 2005, according to Refinitiv data, as the Ukraine war and a weak rupee pushed up energy and raw material costs for companies.
Annual wholesale price inflation, a proxy for producers’ prices, climbed to 15.08% in April, remaining in double-digits for the 13th month in a row, and higher than 14.48% forecast in a Reuters poll of analysts.
Russia’s invasion of Ukraine in February has supercharged already rising commodity and fuel prices and kept global policymakers busy trying to contain red-hot inflationary pressures.
Fuel prices, a big component of the increase, jumped 38.66% on the year versus 34.52% in March.
A more than 4% rupee depreciation against the dollar this year has also made imported items costlier.
Wholesale manufactured product prices rose 10.85%, against 10.71% in the prior month, while food prices accelerated at an 8.88% pace, versus 8.71% the previous month, data showed.
Economists said that with WPI inflation picking up along with retail inflation at an eight-year high of 7.79% in April, the central bank was likely to push for aggressive rate hikes to tame prices.
“With WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further,” said Aditi Nayar, chief economist at ICRA, the Indian arm of ratings agency Moody’s.
She expects a 40-basis-point hike in the repo rate in June followed by a 35-basis-point hike in August.
India announced a ban on wheat exports on Saturday as a scorching heat wave curtailed output and domestic prices hit a record high.
Earlier this month, the Reserve Bank of India said it had started to move away from its ultra-loose monetary policy, as its priorities shift to fighting surging inflation.
(Reporting by Manoj Kumar and Aftab Ahmed; Editing by Jacqueline Wong)