NEW DELHI: India’s wholesale price inflation (WPI) accelerated to an at least three-year high of 9.68 per cent in May from 8.26 per cent in April, driven by a sharp rise in energy prices amid the West Asia crisis, the Ministry of Commerce and Industry said on Monday. The data was the first to be released under a new 2022-23 base year.
The government also released India’s first goods output Producer Price Index (PPI) with the same base year, which showed producer-level inflation closely tracking the wholesale inflation at 9.38 per cent in May compared with 8.06 per cent in April.
The WPI-based fuel inflation rose to 30.33 per cent in May from 24.89 per cent in April.
The ministry simultaneously released a trial input PPI (goods), and a services PPI. The four major output PPI groups — agriculture, forestry and fishing; mining and quarrying; manufactured products; and electricity — recorded inflation rates of 4.58 per cent, 18.97 per cent, 11.28 per cent, and -1.96 per cent, respectively.
The trial input PPI for manufacturing was 104.9 in May, unchanged from April but up from 100.9 in March.
The ministry also released a quarterly services PPI for seven services — banking, securities transactions, insurance, pension fund management, railways, air passenger and telecom. For the fourth quarter of 2025-26 (Q4FY26), the index for banking service contribution was the highest at 129.7, while that for securities transactions was the lowest at 91.7.
D K Srivastava, chief policy advisor, EY India, said he expects the implicit price deflator to rise, widening the gap between nominal and real GDP growth in 2026-27. “Although this may imply higher tax revenues for given levels of tax buoyancy, the government of India may consider absorbing some of the burden of inflation that would otherwise pass on to the producers and consumers. This issue may be pertinent with respect to fixing the specific rates of excise duties,” he added.
While the spike in fuel inflation was the biggest contributor to the rise in the headline WPI print, the increase was broad-based across the major groups.
Primary articles inflation rose to 4.99 per cent in May from 3.78 per cent in April, while inflation in manufactured products, with a weight of 63.1 per cent, increased to 7.48 per cent from 6.68 per cent. This group has seen high increases of over 10 per cent for base metals, chemicals, textiles and electrical equipment. “This is significant because it has embedded higher costs which are not necessarily linked to crude oil,” said Madan Sabnavis, chief economist at Bank of Baroda.
The data revealed that the food index inflation climbed to a 16-month high of 4.49 per cent from 3.11 per cent.
Within the fuel and power segment, inflation in crude petroleum and natural gas rose to 61.51 per cent in May from 56.31 per cent in April. The crude petroleum and Natural Gas index climbed from 92.4 in February to 136.8 in May.
Mineral oils – which include liquefied petroleum gas, petrol and high-speed diesel – recorded an inflation of 49.82 per cent, reflecting war-driven supply disruptions.
Electricity inflation remained negative at -1.85 per cent during the month compared with -2.68 per cent in the previous month. This group now includes new sources of energy such as solar, wind and nuclear.
Experts flagged the upcoming monsoon season as a key near-term risk to food prices going ahead.
India Ratings & Research (Ind-Ra) expects WPI inflation to decelerate to 9.3 per cent in June, while Sabnavis sees inflation remaining in the 8-9 per cent range in the coming months, provided global crude prices stabilise.
“Higher inflation, both in WPI and CPI, is likely to boost nominal GDP growth. Thus, FY27 nominal GDP growth is expected to be higher than the rate assumed in this year’s budget,” said Megha Arora, director, Ind-Ra.
Source: Business Standard / The Pioneer
