WPI Hike: Can’t Blame India, Inflation Now Is Global, Says Kaushik Basu
In the April-June quarter, the economy grew an annual 20.1 per cent, and the central bank expects GDP to expand 9.5 per cent in the current fiscal year ending in March 2022.
As India’s annual wholesale price-based inflation (WPI), a proxy of producers’ prices, increased in October to a five-month high, due to price hikes in fuel and manufacturing, the former Chief Economist at World Bank, Kaushik Basu on Tuesday, pointed out that India needs to support poor, workers and the middle class.
Basu took to his official Twitter handle and wrote, “India’s WPI inflation hits 12.54 per cent. Highest in 20 years. But India can’t be faulted for this since inflation now is global. Where India’s doing worse than others is in supporting the poor, the workers & the middle class. With the policy focus on elites, these groups are suffering.”
Meanwhile, the gap between retail and wholesale price-based inflation has widened in recent months as many companies and retailers are still trying to absorb galloping input costs that threaten to hit their bottom lines.
Annual wholesale price-based inflation in October rose to 12.54 per cent from the previous month’s 10.66 per cent, remaining in double-digits for the seventh month in a row, government data showed on Monday.
Consumer prices based on inflation, the main gauge monitored by the monetary policy committee of the Reserve Bank of India (RBI), rose 4.48 per cent in October from the same month last year, speeding up from September’s 4.35 per cent, separate data released on Friday showed.
Meanwhile, talking about inflation, the Union Ministry of Commerce and Industry in a statement said, “The annual rate of inflation is 12.54 per cent (Provisional) for the month of October 2021 (over October 2020) as compared to 1.31 per cent in October 2020. The high rate of inflation in October 2021 is primarily due to rise in prices of mineral oils, basic metals, food products, crude petroleum & natural gas, chemicals and chemical products etc. as compared to the corresponding month of the previous year.”
Economists said the recent cut in fuel tax rates by the government could lower pressures on households and companies in the short term, but firms are trying to pass on rising costs as domestic demand picks up.
In the April-June quarter, the economy grew an annual 20.1 per cent, and the central bank expects GDP to expand 9.5 per cent in the current fiscal year ending in March 2022.
Wholesale fuel and power prices rose 37.18 per cent in October year-on-year compared with 24.81 per cent in September, while manufactured product prices rose 12.04 per cent compared with 11.41 per cent in the previous month, data showed.
(With Reuters input)
