NEW DELHI, May 17 (Reuters): India's wholesale prices index (WPI) accelerated at the fastest pace in at least 17 years as the Ukraine war and a weak rupee pushed up energy and raw material costs, raising risks for businesses that are unable to pass on costs.
While big retailers, food makers and consumer product companies including Hindustan Unilever, Britania and Procter & Gamble are passing along higher costs to consumers, small companies are finding it hard to raise prices, industry leaders said.
Annual wholesale price inflation, a proxy for producers' prices, climbed to 15.08 per cent in April, remaining in double-digits for the 13th month in a row, and higher than 14.48 per cent forecast in a Reuters poll of analysts.
Wholesale prices are at the highest since at least April 2005, according to Refinitiv data. Some private economists said WPI inflation in April was the highest since 1991.
Economists said that with wholesale inflation picking up along with retail inflation at 7.79 per cent in April - an eight-year high - the central bank was likely to push for aggressive rate hikes to tame prices.
"With WPI inflation remaining solidly in double-digits, the probability of a repo hike in the June 2022 review of monetary policy has risen further," said Aditi Nayar, chief economist at ICRA, the Indian arm of ratings agency Moody's.
She expects a 40-basis-point hike in the repo rate in June followed by a 35-basis-point hike in August.
Russia's invasion of Ukraine in February has supercharged already rising commodity and fuel prices and kept global policymakers busy trying to contain red-hot inflationary pressures.
Private economists worry that rising prices that prompted the Monetary Policy Committee of the Reserve Bank of India to raise the repo rate by 40 basis points this month.
