India's Commerce Ministry released data on Wednesday showing wholesale price inflation jumped to 11.4% in September, the highest rate in 30 months. Fuel and power prices surged 25.9% after a 22.9% rise in August, while manufactured goods climbed 9.8% from 8.4%. Food prices also climbed, with the WPI Food Index up 8.7% versus 7.1% in August.
Fuel inflation was driven by higher crude petroleum, natural gas and mineral oil prices amid renewed tensions near key maritime chokepoints in West Asia. Rajani Sinha, chief economist at CareEdge, warned that “tightness in the physical supply of crude is pushing bulk diesel prices nearly ₹50–60 per litre above retail, which could ripple into higher freight and agricultural costs.”
Manufactured goods, accounting for nearly two‑thirds of the WPI basket, saw sharp rises in basic metals (17%), chemicals (16.7%), textiles and rubber (13.7%) and electrical equipment (12%). The freight‑laden surge in raw material costs is expected to feed into consumer prices.
RBI officials track the Consumer Price Index to set policy, but wholesale inflation often precedes retail moves. Retail inflation, measured by the CPI, ticked up to 5.5% in September from 4.8% in August, suggesting a lagged effect of the WPI spike.
Analysts say the RBI may consider a rate hike at its next policy meeting in early October, as the wholesale surge signals tightening supply chains and higher input costs that could stall economic growth. Meanwhile, small‑scale retailers in Delhi report rising input bills, forcing them to pass the cost onto consumers.