The Wholesale Price Index (WPI)-based inflation rose to 2.13% in February, up from 1.81% in January and 0.96% in December, signalling a gradual build-up of price pressures across the economy.
The positive rate of inflation was primarily due to increase in prices of other manufacturing, manufacture of basic metals, non-food articles, food articles and textiles etc.
Manufactured products — which carry the largest weight in the WPI basket were the biggest contributor to February’s increase in wholesale inflation.
Inflation in this category rose to 2.92% in February, slightly higher than 2.86% in January and 2.03% in December. Food inflation grew to 1.85% in February as compared to 1.41% gain in January.
Inflation in primary articles — which include agricultural commodities and minerals — rose sharply on an annual basis to 3.27% in February, up from 2.21% in January and just 0.21% in December.
Despite the annual increase, the category actually saw a month-on-month decline of 0.52%.The fall was mainly driven by lower prices of food articles (down 1.33%) and minerals (down 1.21%), though crude petroleum and natural gas prices rose 4.17% and non-food articles increased 0.83% during the month.
Fuel and power prices remained a drag on wholesale inflation despite a modest monthly rebound.
Inflation in the category stayed negative at –3.78% in February, though the deflation was slightly less severe than –4.01% in January. In December, fuel inflation had stood at –2.31%.
On a month-on-month basis, however, the fuel and power index rose 1.17%.
Inflation expectations are also being shaped by developments in West Asia, where the conflict involving Iran, Israel and the United States has increased uncertainty around global oil supplies.
Shipping disruptions near the Strait of Hormuz, a key passage for global crude shipments, have raised concerns about supply bottlenecks. Nearly one-fifth of global oil trade passes through the waterway.