Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on March 2021 WPI Data released today

"The WPI trajectory over the last 3 months further reinforces the concerns on the underlying inflationary pressures which can get further aggravated by a re-emergence of supply constraints in the wake of the second Covid wave. The YoY print in WPI has almost tripled from 2.51% in Jan 2021 to 7.39% in March 2021 although the base effect has played a role in the figures. While the sharp rise in the fuel and power component to 10.25% in the previous month is understandable in the light of the rise in global crude and domestic retail fuel prices, the rise in prices of manufactured products by 7.34% reflects a steady transmission of input costs. One case in point is the 14.51% rise in wholesale prices of mild steel prices on a YoY basis. Clearly, this does not augur well for retail inflation in the near term; however, the favourable base factor in the previous year may help to moderate the average CPI print for FY22."

Source : Equity Bulls

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