WPI inflation rising to 11-year high in April 'major surprise'; to surge further in May: Barclays

Wholesale Price Inflation (WPI) climbing to an 11-year high of 10.49 per cent in April is a "major upside surprise", and it is the first time WPI has been in double digits in almost a decade, Barclays said in a report titled, 'April WPI: Surging ahead' has said.

The banking, technology and shared services company has said perishable food products -- especially vegetables and fruits -- minerals and basic metals drove the inflation surge in April, which may "precede an increase in the CPI in the coming weeks".

Barclays said the WPI inflation could further rise, peaking in May. "With the summer season likely to add to upward food price momentum, our estimates show that wholesale price index could peak in May before moderating thereafter," it said.

Also read: WPI inflation hits all-time high of 10.49% in April

It believes the RBI officially targets retail price inflation, but the current surge in WPI is likely too "high for the bank to ignore". "The details show that food inflation rose sequentially in April (3.8% m/m), led by rising prices for fruits and vegetables, and non-food articles. We also saw increases in minerals (6.6% m/m), oilseeds (5.8% m/m) and crude products (4.8% m/m), which drove up primary articles WPI. With the start of the summer months, perishables inflation could tick higher, in line with seasonal trends," it said.

While fuel prices softened in April, May could see a reversal as domestic prices rise again in line with international crude prices, it said. On a month-on-month basis, WPI inflation saw a 3.1 per cent rise as compared to 7.39 per cent in March. The wholesale inflation was 4.17 per cent in February. For January, the WPI inflation rate stood at 2.51 per cent. Barclays said with the start of the summer months, perishables inflation could tick higher, in line with seasonal trends.

The government data released on May 12 shows India's Consumer Price Index (CPI) based retail inflation eased to 4.29% in the month of April, primarily due to reduction in food prices, the data released by the Ministry of Statistics & Programme Implementation (MoSPI) on May 12 showed. It stood at 5.52 per cent in March.

Also read: WPI inflation rises to 8-year high of 7.39% in March

Also read: WPI inflation jumps to 27-month high in Feb at 4.17%