The Wholesale Price Index (WPI) was seen peaking in August 2022, as highlighted in the space earlier. At 32.6 percent year-on-year for October 2022, WPI is the lowest since May 2022. That said October also marked the sixth straight month for WPI staying clear of 30 percent. On a 12-month moving average basis, WPI at 31 percent is still the highest-ever, considering the peak months occurred in 1QFY23.It was 14 percent in the same period last year – showing the rise has been rather meteoric.

The high base is now surely starting to kick in and will be more pronounced from hereon. Energy price adjustment has largely taken place or deferred in some cases. Electricity price adjustment will continue to feed in and be passed on to retail prices. More upward adjustments are in the pipeline for commercial and industrial users, and should keep the sub-index up.

There appears to be confusion over the state of natural gas pricing for industries and commercial consumption. The adjustment has been pending for over two years and has been agreed in principle with the IMF – but the same still has not been passed on despite all necessary petitions heard and decided upon by the regulator. The law now does not require government’s approval for prices to be effective – but it is easier said than done, as despite lapse of the said timeframe, previous prices continue to be in effect. Significant reduction in prices of imported gas has played down a part in lowering the sub-index with immediate effect.

Transportable goods continue to headline WPI, mainly on the back of increased transportation fuel prices. Even though, crude oil prices have softened from a quarter ago, government’s revenue requirements continue to ensure prices at pump will remain elevated year-on-year. As the government moves towards higher levy imposition, HSD prices are likely to face significant upward revision.

The authorities have exhausted the upper tax limit on gasoline prices and have shielded HSD up until now. This may now come to an end, as the onus will now fall on HSD, and any increase in HSD prices has a higher bearing on WPI transportable good index than any other fuel type.

Food and agri prices continue to rise in double digits. The existing and upcoming crops will decide the fate of wholesale grain prices. Nobody is ruling out another rally of higher farm prices, as the government is never far from intervening via higher MSPs. So while the WPI may have peaked for now, the CPI still has some catching up to do.