In data released by NSO on Monday, a new hike is seen in retail inflation in February. Inflation which is measured by Consumer Price Index (CPI) rose to an annual 6.1% in February, as compared to the 6% value of January. Retail inflation peaked at an eight-month hike in the food & beverages, clothing, and footwear market, whereas Wholesale Price Inflation stayed in double-digits for the 11th consecutive month. This caused the authorities a challenging situation of building a hardened policy amid the Russia-Ukraine crisis.
In the data released, rural areas suffer high percentage inflation, rising to 6.4%, while in urban areas, it was at 5.8%. Edible oil prices rose by 16.4% and may continue to become a cumbersome challenge in the months to come. Food and beverages have shown a robust increase in their prices despite pulses, sugar, vegetables staying in moderation.
Where RBI Governor has assured the market that there is no need to be alarmed over the 6% retail inflation, data have shown, measured by WPI (Wholesale Price Index), there is an annual 13.1% rise in February, in comparison to the 13% of January figures. The WPI rise is affected by the high price of fuel and power, non-food articles, basic metals, and minerals.
The rise in commodities prices, all around the world, is seen as a consequence of the war situation in Ukraine, disrupting value chains. The longer the war, the more likely prices will continue to soar high in the sky. This is particularly in the case of crude oil, fertilizers, manufactured products, and metals. The result of inflation can also be seen in the domestic market. Consumers have started opting out of complimentary items, non-brand products, and reduced purchases as a way out of inflation.
Consumers are now using cost-effective packs and moving to non-brands for necessities like edible oil. Hand wash and Sanitizer, which had seen quite a rise in the year 2020, have now been reduced to 61% market penetration from the earlier 70%.