India’s wholesale price index (WPI)-based inflation surged to a series-high of 11.39% in September, up from 9.92% in August, driven by rising prices of food, manufactured items, and fuel and power, government data showed on Wednesday.Inflation in the food index rose to 8.66% in September from 7.05% in August. In manufactured items, wholesale inflation climbed to a series-high of 9.76%, compared with 8.37% in the previous month.Inflation in the fuel and power basket also accelerated, reaching 25.85% in September against 22.93% in August, according to data reported by news agency PTI.
Why is wholesale inflation rising?
Wholesale inflation has been on an upward trajectory since the beginning of the current financial year, with the West Asia war and the resulting blockade of the Strait of Hormuz pushing up global crude oil and fertiliser costs. The increase has also affected food and commodity prices.ICRA principal economist Rahul Agrawal said elevated global commodity inflation had pushed WPI inflation to a series high. Food inflation based on the WPI rose to a 23-month high in September 2026, amid a significant increase in inflation across cereals, pulses, fruits and vegetables.ICRA expects WPI inflation to rise further to 12% in October 2026, with higher food inflation, persistent global energy and commodity prices, and an adverse base effect contributing to the increase.Agrawal said wholesale inflation was expected to remain elevated in double digits through the third quarter of FY2027.Barclays also warned that wholesale and producer price inflation could accelerate in the coming months as international energy and metal prices remain elevated.“With international energy and metal prices elevated, wholesale and producer price inflation may accelerate in coming months,” Barclays said in a research note.The brokerage added that elevated global energy prices amid the Middle East conflict, alongside rising domestic food prices, were likely to push WPI inflation higher in the coming months.
Producer prices and impact on businesses
Output producer price index (OPPI) inflation also rose to 11.4% year-on-year in September from 9.8% in August. The increase continued to be driven by higher manufacturing and mining producer price inflation, Barclays said.Industry chamber PHDCCI’s Secretary General and CEO Ranjeet Mehta said the latest WPI figures pointed to inflationary pressures across several stages of production.While wholesale price movements do not translate directly into retail inflation, their persistence could affect corporate margins, working-capital requirements and investment decisions, Mehta said.
Retail inflation also rises
The rise in wholesale inflation comes after retail inflation based on the consumer price index (CPI) climbed to 5.54% in September from 4.83% in August, reaching a 23-month high, according to government data reported earlier this week.September was the first month in which retail inflation crossed 5% under the new CPI series introduced earlier this year. The rate remained above the Reserve Bank of India‘s 4% target for the fourth consecutive month, although it was within the central bank’s tolerance band of 2-6%.Food inflation under the CPI rose to 7.7% in September from 6% in August. Onions recorded a 108% year-on-year price rise, while garlic prices increased 55% and lemon prices rose 36%. Potato, tomato and lady finger prices, however, declined.Higher inflation in goods transport and restaurant services is at 14.7% and 9.4%, respectively, amid rising fuel costs.The RBI’s Monetary Policy Committee raised the benchmark policy rate by 25 basis points to 5.50% last week amid inflationary pressures.Bank of Baroda chief economist Madan Sabnavis said that the transmission of higher wholesale prices into consumer inflation was yet to be seen, adding that some industries, including durables, fast-moving consumer goods and automobiles, had announced price increases that could show up in the coming months.DBS Bank senior economist and executive director Radhika Rao said the RBI was expected to keep the possibility of another rate hike open at its December policy meeting.
