India's wholesale price index (WPI) inflation accelerated to 2.13% in May 2024, marking an 11-month high, according to data released by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce & Industry. This figure represents the third consecutive month of increase in wholesale prices, following a reading of 1.26% in April 2024 and 0.53% in March 2024. The latest data indicates a broad-based upward trend across various commodity groups.

The surge in WPI primarily reflects increases in the prices of food articles, crude petroleum & natural gas, and manufactured products. Wholesale inflation had previously remained subdued, even entering negative territory for several months in 2023. The current upward trajectory suggests rising input costs for businesses, which can eventually translate into higher retail prices for consumers. This trend is closely monitored by economic policymakers, including the Reserve Bank of India, as it can influence future monetary policy decisions.

A detailed breakdown of the WPI components reveals significant contributions to the overall rise in May 2024:

  • Primary Articles: Inflation in this category climbed to 7.77% in May, up from 5.01% in April.
    • Food articles inflation reached 9.82% in May, compared to 7.74% in April. Specific sub-categories contributing to this increase include:
      • Vegetables: 32.42% (compared to 23.60% in April)
      • Pulses: 21.95% (compared to 16.51% in April)
      • Onion: 58.05% (compared to 59.78% in April)
      • Potatoes: 64.05% (compared to 78.30% in April)
      • Cereals: 9.01% (compared to 9.07% in April)
  • Fuel and Power: Inflation in this segment rose to 5.03% in May, from 1.38% in April. This increase was largely driven by a sharp rise in crude petroleum and natural gas prices.
    • Crude Petroleum & Natural Gas: 29.81% (compared to 19.78% in April)
  • Manufactured Products: This category also experienced a marginal increase, with inflation moving to 0.72% in May from 0.42% in April. This segment includes various industrial inputs and finished goods, such as textiles, chemicals, and basic metals.

The May 2024 WPI figure of 2.13% represents the highest level since June 2023, when wholesale inflation stood at 4.12%. Following a period of deflation that spanned from April to October 2023, the WPI has shown a gradual firming trend, moving into positive territory and now accelerating. The consistent rise underscores evolving cost pressures within the economy.

The upward momentum in wholesale inflation is likely to be influenced by global commodity price trends, particularly crude oil. Continued volatility in international crude oil markets, coupled with domestic demand-supply dynamics for food items, could potentially exert further upward pressure on the WPI in the coming months. Policymakers and businesses will continue to monitor these trends closely for their implications on the broader economic landscape and consumer price stability.