Mr.Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research comments on WPI Dec'21
"The WPI print for Dec-21 has modestly climbed down to 13.56% YoY in Dec-21 from a high of 14.23% in Nov-21 with the sequential contraction of 0.35% bringing partial relief to the WPI inflation trajectory.
But the double digit YoY print continues to reflect the inflationary pressures in the manufacturing and the services sector.
The data indicates that the incremental price pressures in the primary article and the fuel segments have eased in the previous month although a fresh rise in global crude prices can make such a relief temporary. As expected, there is a moderation in the wholesale food category driven by the seasonal drop in vegetable prices including a sharp drop in onion and potato prices. While the pass through of higher input costs to manufactured products has continued in Dec-21, the sequential growth is low at 0.22% for that category due to the loss of momentum in demand recovery.
Further, WPI core inflation (non-food manufacturing inflation) is estimated to have moderated to 11.0% YoY in Nov-21 from 12.3% YoY in Nov-21, with a lower sequential rise of 0.31% vs 1.24% in the previous month. Acuité nevertheless, expects a further pass through of input costs in manufactured goods if demand continues to revive or additional supply chain challenges surface due to the new pandemic wave. We expect continuing supply side bottlenecks, raw material shortages and high commodity prices to hold the core inflation at high levels in the near term."