Having gone down last month, the Wholesale Price Index (WPI) is back with another month-on-month increase – registering 1.4 percent increase in November 2023 over last month. On year-on-year basis, WPI inched up to 26.4 percent – highest in seven months. On fiscal year-to-date basis, it averages 25 percent – significantly down from the average same period last year at 35.6 percent. The high base remains at play – as it has now been 26 months since WPI crossed 20 percent and never looked back – well and truly a first in recorded history.

The WPI composition keeps altering with the focus now shifting from agriculture produce and food products to electricity and gas charges. The electricity and gas sub-group recorded an increase of 75 percent month-on-month, despite a 9 percent month-on-month reduction in electricity charges. The weighted average contribution of the gas and electricity sub-group went up to 24.5 percent for November 2023 – highest in 41 months. The group also contributed the most to WPI increase in November in terms of weighted contribution at 24 percent – with the assigned weight of only 12 percent.

The category termed as “Natural Gas Liquified” in the WPI basket is singlehandedly responsible for the jump. Surely, LNG prices did not go up 75 percent from last month – as they have largely remained stable over the past few months. It is the natural gas price that is part of the category – which has caused quite a stir. Industrial and commercial tariffs went up for almost all categories effective November 1, 2023 – and that is what explains the increase in “Natural Gas Liquified” category.

Electricity charges went down courtesy smaller Fuel Charges Adjustments (FCA) for the month – taking the effective tariff down 9 percent month-on-month. This party will be short-lived though, as the power purchase data for October 2023 (applicable to December 2023 tariffs) shows a hefty increase in the range of Rs3-3.4 per unit in lieu of FCA – which will lead to a double-digit month-on-month increase – and keep the sub-group reading elevated. Mind you, electricity has a considerably high weight in overall WPI basket at 5.5 percent.

There has been a considerable respite in the transportable good category – led primarily by petrol, diesel and furnace oil prices – all of which have come down considerably from a month ago. Will this translate into price reversal in consumer items remains to be seen, although that appears less likely given the downward sticky nature of most consumer items. But that pace of increase in consumer good prices is all set to moderate – given much stable currency and an under pressure oil market.