Wholesale price index (WPI) inflation in India rose to 9.92% in August, staying near the 10% mark for the fourth consecutive month, data released by the commerce ministry on Monday showed.
The rise in wholesale inflation last month, from 9.78% in July, was primarily driven by higher fuel prices.
Wholesale food inflation also rose in August but was lower than the headline print, while core inflation eased slightly.
Wholesale prices have risen sharply due to the energy price spike caused by the war in West Asia. WPI inflation has averaged 9.6% during April-August, sharply higher than -0.2% in the corresponding period a year ago.
The August wholesale inflation print of 9.92% is the second highest in the new WPI series, which has data since April 2024.
Economists expect WPI inflation to rise above 10% in September as Brent crude oil prices have risen past $100 per barrel during the month.
Meanwhile, output Producer Price Index (PPI) inflation rose to a series high of 9.81% in August from 9.57% in July because of a rise in manufacturing and mining inflation. The trial input PPI for the manufacturing sector fell to 104.2 in August from 105.9 in July.
Higher food and fuel prices also led to a rise in retail inflation, as measured by the Consumer Price Index (CPI), to a 20-month high of 4.82% in August.
WPI Internals
WPI fuel and power inflation rose to 22.93% in August from a four-month low of 20.05% in July, reflecting the rise in global energy prices last month. Within fuel and power, inflation was driven by Liquefied Petroleum Gas (LPG), petrol, high speed diesel, crude petroleum, and natural gas.
“Prolonged West Asia crisis has reversed the two-month declining trend of fuel and power inflation and is likely to remain elevated until the crisis is resolved,” said Devendra Pant, chief economist, India Ratings and Research.
Manufactured products inflation, which has the largest weight in WPI, rose slightly to 8.37% in August from 8.29% in July. At 8.37%, manufacturing WPI inflation in August was at a series high, driven by tobacco products, textiles products, chemical products, rubber & plastic products, base metals, and electrical equipment. “This suggests WPI inflation is turning structural,” Pant said.
WPI food inflation rose to a 20-month high of 7.05% in August from 6.65% in July. The rise in wholesale food inflation was led by fruits, while eggs and meat inflation remained high.
Core WPI inflation, which excludes food and fuel items, eased slightly to 8.1% in August from a series high of 8.2% in July.
“Going forward, we expect wholesale inflation to stay high in the near term, with fuel and food as the key swing factors. The main risk is a further rise, driven by a crude oil flare-up or a renewed rainfall shortfall denting the kharif harvest,” said Rajeev Sharan, head of research at Brickwork Ratings.