Here's what experts have to say about February CPI, WPI inflation

India's retail inflation in February inched further to 6.07 per cent, a marginal increase from 6.01 per cent in January 2022, the data from the Ministry of Commerce and Industry showed. The retail inflation stood at eight-month high in February.

"Led by food and beverages, clothing and footwear, and housing, the CPI inflation inched up to an eight-month high 6.1 per cent in February 2022, similar to our forecast (6.2 per cent), and discomfortingly above the upper threshold of the MPC's 2-6 per cent medium term target range," ICRA Chief Economist Aditi Nayar said.

In February, inflation in oils and fats was at 16.4 per cent as compared to 18.7 per cent in January. Similarly, vegetable prices rose 6.13 per cent compared with an increase of 5.19 per cent in the previous month. Inflation for pulses was flat at 3.02 per cent in February. Clothing and footwear inflation was at 8.86 per cent compared with 8.7 per cent in January. Fuel and light inflation stood at 8.7 per cent against 9.3 per cent in January.

Experts believe that the ongoing geopolitical tension between Russia and Ukraine can disrupt the inflation calculations across the world and in India as well. Rising crude oil prices will not only increase the current account deficit of the government but also lead to hike in fuel prices which will have a cascading effect across the supply chain.

"The Russia-Ukraine crisis has amplified the cost pressures and supply disruptions across the world. For India, the most dominant impact will be seen through crude oil prices. While reduced excise duties on petrol and diesel can offset some impact, they will not be sufficient if crude stays above $90 per barrel next fiscal. Core inflation is further expected to face pressure from companies passing on costs to retail prices to a greater extent next fiscal," CRISIL Chief Economist Dharmakirti Joshi said. 

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Joshi believes that while food inflation is likely to remain benign on account of normal monsoon, rising fertiliser costs and international food prices could add some upside. Due to these factors, he expects CPI inflation to average 5.4 per cent in fiscal 2023 compared with the expected inflation of 5.5 per cent in the current fiscal. This assumes Brent crude to average $85-90 per barrel next fiscal.

According to Bank of Baroda Chief Economist Madan Sabnavis, the sharp jump in personal care and effects has been due to increase in gold prices on an average by 6.2 per cent in February against 1.3 per cent in January. 

"However, transport and communication inflation remained unchanged as retail fuel prices were maintained at the same level. However, with oil prices hovering at over $110/bbl mark, it will soon translate into retail prices as well. We expect moderation in core to start from Q2FY23, only when base effect comes into play," he said.

On the other hand, wholesale inflation, striding a similar path, rose to 13.11 per cent in February, data released by the Ministry of Commerce & Industry showed. The wholesale price index (WPI) grew 12.96 per cent during the month of January 2022, while WPI inflation in February 2021 was at 4.83 per cent. 

"The WPI inflation accelerated mildly in February 2022, despite a favourable base effect, led by manufactured products, non-food primary articles, crude oil and natural gas, and printed above expectations. In month-on-month terms, the WPI rose by a sharp 1.4 per cent in February 2022, after two months of mild easing, with a broad-based rise across the major groups except for primary food articles," Nayar of ICRA said.

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