Home ›› 15 Oct 2021 ›› World Biz
India’s annual wholesale price-based inflation, a proxy for producers’ prices, loitered in the double digits for the sixth month in a row in September, fuelling concerns of inflationary pressures as energy and raw material costs surge for companies.
The gap between retail and wholesale price-based inflation has widened in recent months as many companies and retailers are absorbing rising input costs that threaten to hit their bottom lines.
Annual wholesale price-based inflation in September slightly eased to 10.66 per cent from the previous month’s 11.39 per cent, government data showed on Thursday, helped by slower increases in some food items.
Economists said that with global commodity prices expected to remain elevated in coming months, manufacturers could try to pass on rising costs to consumers particularly during the festive season starting this month.
“High inflation poses a considerable risk to economic revival in the short to medium term,” Sumit Shekhar, an analyst at brokerage Ambit Capital, said in a note on Thursday. Consumer price-based inflation, the key measure of inflation for the Reserve Bank of India in setting its monetary policy decisions, eased in September to a five-month low of 4.35 per cent from a year earlier, separate data released on Tuesday showed.
In September, wholesale fuel and power prices rose 24.81 per centfrom a year earlier, compared with a 13.63 per cent rise in retail prices. Wholesale manufactured product prices rose 11.41 per cent in September versus a less than 6 per cent rise in retail prices.
Economists have warned that companies’ squeezed margins in the short term could hit private investment and the nascent economic recovery in Asia’s third-largest economy. The economy recorded its worst-ever contraction of 7.3 per cent in the last fiscal year ending in March. In the April-June quarter, the economy grew an annual 20.1 per cent, and the central bank expects GDP to expand 9.5 per cent in the current fiscal year ending in March 2022.
