Nomura analysts write that India WPI inflation rose to a 39-month high year-on-year in February to 6.5% up from 5.2% in January. The jump was driven by inflation in primary articles and fuel inflation, while manufacturing inflation slowed to 3.7% y-o-y in February from 4% in January. The discrepancy indicates that the acceleration in WPI inflation was driven by higher input costs as opposed to output prices. Nomura’s breakdown of WPI components show that input cost inflation surged to 9.1% from 6.8%, while output prices dropped to 2% from 2.4%, showing higher costs have likely not yet been passed on to consumers, though analysts warn the risk firms will do so is growing.
A woman looks at an item as she shops at a food superstore in Ahmedabad, India October 13, 2016. Photo: Reuters, Amit Dave
India’s WPI inflation rises to 39-month high on higher input costs
Data indicates higher costs have yet to be passed on to the consumer, but the risk that will change is growing