The steady rise in the cost of fuel, including petrol, LPG, and high-speed diesel, percolated down into other sectors of the economy, resulting in wholesale inflation of 12.07 percent in June, somewhat lower than the huge 12.94 percent in May. Wholesale inflation in India, as measured by the Wholesale Price Index (WPI), hit new highs for the second month in a row in May, with the rate of inflation having risen for five months in a row.
It had continued to rise month after month, reaching a new peak in April (10.94 percent). It was 7.89 percent in March and 4.83 percent in February. While it has been steadily rising since December, when it was just 1.9 percent, the latest numbers illustrate how skyrocketing gasoline prices, and hence transportation expenses, have resulted in cost spikes across the economy in June.
The month saw a 32 percent increase in fuel inflation. However, this was smaller than the 37 percent increase in May. In April, it was at 21%. After falling for 11 months in a row, overall gasoline costs rose by only 2% in February, according to the WPI. However, things have dramatically deteriorated since then.
“While core inflation increased further to 10.4% in June 2021 from 10% in May 2021, the speed of the month-on-month increase in this index dropped to a four-month low 0.5 percent,” according to the report. In July 2021, we predict YoY core inflation to rise somewhat more before beginning a moderate downward trend.