Wholesale Inflation Climbs To 9.68% In May As Fuel And Food Costs Rise

India’s wholesale price inflation rose to 9.68% in May from 8.30% in April, led by a sharp increase in fuel and power prices along with higher food and manufacturing costs, according to data released by the Ministry of Commerce and Industry on June 15.

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The Wholesale Price Index (WPI)-based inflation print marked an increase of 1.38 percentage points month-on-month, reflecting the continued impact of elevated energy prices amid disruptions in global crude oil markets during the West Asia conflict.

Fuel Segment Remains Key Inflation Driver

Fuel and power emerged as the largest contributor to wholesale inflation during the month. Inflation in the category stood at 30.33% in May, compared with 24.71% in April.

Within the segment, crude petroleum and natural gas recorded inflation of 61.51%, while mineral oils registered inflation of 49.82%. The government said higher prices of crude petroleum, natural gas, mineral oils, chemicals and chemical products, and basic metals significantly influenced the overall increase in wholesale prices.

Rising energy costs also pushed up input expenses across industries, contributing to broader producer-level inflationary pressures.

Food Inflation Moves Higher

The WPI Food Index increased to 4.49% in May from 3.11% in April. Inflation in primary articles was up at 4.99% from 3.78% in the previous month, primarily on account of higher prices of several agricultural commodities. The increase in food inflation added to overall wholesale price pressures during the month.

Manufacturing Inflation Strengthens

Inflation in manufactured products climbed to 7.48% in May from 6.68% in April. The rise points to higher production costs in some sectors, partly due to higher prices of raw materials and energy. Manufactured goods are a significant element of the wholesale price basket, making the category a major contributor to the overall inflation figure.

First Release Under New WPI Series

The May data is the first inflation reading released under the revised WPI series with 2022-23 as the new base year, replacing the earlier 2011-12 base year.

As part of the revision, the government expanded the WPI basket to 957 items from 697 earlier. The updated basket includes renewable energy sources such as solar and wind power, along with nuclear electricity.
Crude petroleum and natural gas have also been shifted from the primary articles category to fuel and power to better capture movements in energy prices.

Alongside the revised WPI series, the government has introduced Producer Price Indices (PPIs), including Output PPI, Trial Input PPI and Service PPI covering seven services sectors.

The Department for Promotion of Industry and Internal Trade (DPIIT) said the WPI and PPI series will run simultaneously for the next five years, after which WPI will be phased out in line with international practices and recommendations of the International Monetary Fund.