Wholesale price inflation, or WPI, reached 6.55 percent in February, after hitting a 30-month high of 5.25 percent the previous month. In December 2016, it was 3.68 percent (revised).
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The latest data released by the Indian government on Tuesday showed that WPI was (-) 0.85 percent in February last year.
The spike is being attributed to a broad increase in prices across all categories — primary articles, fuel and power, and manufactured products. The top contributors to the rise are diesel, wheat, minerals, sugar and fruits, indicating that the demand slump witnessed in the initial weeks of demonetisation are being reversed gradually.
Sugar prices are moving up because the output projections for the crop year 2016-17 continue to be revised downwards in view of drought in some sugarcane-growing states such as Karnataka.
The data has not had any impact on stock markets; the BSE Sensex and the NSE Nifty were trading with gains of about 1.65 percent, at around 12.35 pm.