Noida, June 15 (APAC Media): Wholesale price inflation rose to 9.68 per cent in May, driven by a broad-based increase in food articles, fuel and power, and manufactured products, government data showed on Monday.
India’s wholesale inflation had surged to a 42-month high of 8.26% in April under the previous series, highlighting persistent price pressures. Economists had projected wholesale prices to rise 9.05% year-on-year in May.
The food index stood at 3.11% in April, while wholesale inflation in the fuel and power category was recorded at 24.89%, according to the latest data release.
Inflation in crude petroleum and natural gas surged 61.51% year-on-year, underscoring elevated energy price pressures.
State-run fuel retailers raised petrol and diesel prices four times in May, pushing up transportation costs across the economy.
Economists warn that persistently high energy prices could widen India’s current account deficit, put pressure on the rupee and fuel broader inflation in the world’s third-largest oil importer.
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Meanwhile, forecasts of a below-normal monsoon have heightened concerns over food inflation later in the year, adding uncertainty to the inflation outlook.
Inflation in manufactured products accelerated to 7.48% in May, led by higher prices of chemicals, textiles, machinery and basic metals.
Among key segments, inflation in basic metals rose to 12.3%, while chemicals and chemical products recorded inflation of 13.4%. Wholesale inflation in textile manufacturing also surged, climbing 10.22% during the month.
The government on Monday launched a new Producer Price Index (PPI) series and introduced a Wholesale Price Index (WPI) with a revised base year, marking a major overhaul of India’s inflation measurement framework.
The WPI base year has been updated to 2022-23 from 2011-12, while the number of commodities covered under the index has been expanded to 957 from 697.
India has traditionally relied on the WPI as a key measure of producer-level inflation. The introduction of the PPI brings the country’s statistical system closer to international standards and is expected to improve the deflation of economic growth data over time.
Plans to replace the WPI with a PPI have been under consideration for more than two decades.
The revised WPI series expands coverage of India’s evolving energy landscape by incorporating renewable energy sources such as solar and wind power, along with nuclear-generated electricity.
In another key change, crude oil and natural gas have been reclassified from the primary articles category to the fuel and power group, providing a broader and more representative measure of energy price movements.
Economists said the latest reading reflects persistent supply-side constraints and elevated global commodity prices that continue to influence domestic wholesale inflation.
The revamped WPI series adopts a chain-based short-term formulation methodology, replacing the earlier long-term approach and aligning the index more closely with international statistical practices.
To facilitate a smooth transition, the government has introduced a linking factor based on the geometric mean of FY25 index values. The mechanism will enable comparisons between the old and new WPI series across commodities and major groups during the transition period.
Market watchers said sustained inflationary pressures in the wholesale segment could influence future monetary policy decisions, depending on the trajectory of retail inflation and growth dynamics.
WPI, which measures price movements only in goods, the new Producer Price Index (PPI) will also capture services-sector inflation. The index will track input costs, output prices and service-sector price trends, initially covering seven segments: banking, securities transactions, insurance, pension fund management, railways, air passenger transport and telecommunications.
The government aims to gradually transition from the WPI to the PPI over the next five years, though the pace of the shift will depend on the performance and reliability of the new indices.
–ENDS–
Disclaimer:Â Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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