A sudden rise in cost of fuel, including petrol, LPG and high speed diesel percolated down into the economy in March as wholesale inflation in the country reached a massive 7.3 percent.
Measured by the Wholesale Price Index (WPI), wholesale inflation had been 4.17 per cent in the previous month of February. While it has been on a continuous uptick from December onwards when it was just 1.9 percent, the latest rise shows broad based price rise shot up in March.
Economists blame a sudden 10.2 percent jump in fuel inflation as the main reason for this. According to the WPI, after reducing for 11 straight months, overall fuel prices had risen by just 0.6 percent in February. Case in point, petrol prices rose by 18.4 percent in March, compared to just 0.8 percent in February. LPG prices soared to 10.5 percent in the latest month, up from just 0.5 percent in February.
“Given the low base of March 2020, the inflation for crude petroleum and natural gas soared to 32.1 percent in March 2021. While crude oil prices have retreated from the peaks seen in March 2021, a falling base is expected to push up the inflation for this segment as well as mineral oils further in April 2021.
Moreover, the depreciation in the INR will push up the landed cost of imports, adding to the inflationary pressures for the WPI going forward,” Aditi Nayar, Chief Economist at ICRA, said.