India launched a revised Wholesale Price Index (WPI) series with 2022-23 as the base year, replacing the previous 2011-12 base year series. According to the Ministry of Commerce & Industry, the new series introduces comprehensive producer price indices including Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI) and Services Producer Price Index (PPI) with the same 2022-23 base year. The revised WPI has been compiled using gross value of output-based weights and updated methods for index compilation and imputation of missing price data. The government announced that WPI and producer price indices will be published together for five years, after which the wholesale price index will be discontinued. The item basket for the WPI series expands from 697 to 957 items under the modernized framework, with provisional indices of WPI, OPPI, and trial IPPI for a reference month released on the 14th of the following month. The Ministry of Commerce & Industry cautioned users regarding historical comparisons, noting that the item basket underwent significant changes at lower levels of disaggregation due to the inclusion of new items and removal of obsolete ones.
India's wholesale inflation accelerated to 9.68% in May under the revised 2022-23 base year series, up from 8.26% in April, according to the latest data released by the Ministry of Commerce & Industry. The all-commodities WPI stood at 109.9 in May, rising from 108.8 in April, showing significant month-on-month increase driven by rising costs across key sectors. The quickening pace of price gains was visible across all major commodity segments, with the surge in wholesale inflation underscored by the economic impact of the West Asia conflict and the disruption of shipping through the Strait of Hormuz. Retail inflation, measured by the Consumer Price Index (CPI), also moved higher during the month, reaching a 16-month peak of 3.93%, compared with 3.48% in April. Economists had projected wholesale inflation rising to 9.05%, with the actual figure exceeding expectations. The sharp rise in wholesale inflation reflects how higher global energy prices are increasingly feeding through the broader economy, affecting everything from transportation and manufacturing costs to food prices.
Higher prices of fuel, power, manufactured goods and food items were the main contributors to the rise in wholesale inflation during May. As reported by the Ministry of Commerce & Industry, mineral oils, crude petroleum and natural gas, chemicals and chemical products, and basic metals were among the major contributors to wholesale inflation during April and May. The WPI Food Index recorded inflation of 4.49% in May, compared with 3.11% in April, combining food articles under primary articles and manufactured food products. Wholesale food prices rose 3.60% year-on-year in May after advancing 2.43% in April, while prices of manufactured products advanced 7.48% against April's 6.68% rise. Inflation in manufactured products climbed to 7.48%, up from 6.68% in April, while primary articles inflation rose to 4.99% from 3.78% a month earlier. The impact of rising energy costs is also becoming visible in food prices, with higher transportation expenses, increased input costs and supply-chain pressures contributing to the rise.
In the third month of the ongoing crisis, which saw a temporary pause in the conflict after the US-Iran agreement to a ceasefire, inflation in the fuel segment stood at 30.33% compared to 24.89% in the previous month. Crude petroleum prices were a major contributor, with inflation in the segment increasing to 61.51%, compared with 56.31% in April. This represents a significant acceleration in fuel price inflation, contributing substantially to the overall wholesale price increase. Under the revised series, crude petroleum and natural gas have been moved from primary articles to the fuel and power category, expanding the scope of fuel-related inflation measurements. Crude prices have risen 27% since the U.S.-Israeli war on Iran broke out in late February, prompting state-run oil marketing companies to raise retail fuel prices four times in May. According to the Ministry of Commerce & Industry, crude petroleum and natural gas have been relocated from primary articles to the fuel and power group to ensure a coherent structure for tracking energy prices. To facilitate data continuity, the ministry fixed the tracking linking factor for all commodities at 1.53, while primary articles stand at 1.71, fuel and power at 1.65, and manufactured products at 1.44. The surge follows months of disruption in global energy markets after tensions in West Asia affected shipping through the Strait of Hormuz, a critical route through which a substantial share of India's crude oil imports pass.
Economists and industry experts have welcomed the government's rollout of the new producer price index framework, with Rajani Sinha from CareEdge Ratings describing it as a positive step towards aligning domestic price indices with international practices. Rajeev Juneja from PHDCCI described the new series as an important modernisation initiative that would bring India's inflation statistics closer to globally accepted standards. According to PHDCCI, the parallel publication of WPI and PPI over the next five years will strengthen inflation analysis, improve industry-level monitoring and facilitate a smoother transition to the new framework. Shashwat Singh from Bajaj Broking identified fuel and power inflation as the biggest contributor, led by sharp increases in crude petroleum and natural gas prices, as well as mineral oils. While stable retail inflation continues to support consumer demand, the persistent cost-push pressure visible in wholesale prices, particularly from fuel and energy inputs, remains a near-term risk amid ongoing geopolitical uncertainties. Sinha projected WPI inflation to average around 7.8% in FY27, assuming Brent crude oil prices average around $90 per barrel, and cautioned that food inflation risks remain due to the higher probability of an El Niño event this year. According to Sinha, global energy prices have cooled significantly following recent positive developments in West Asia, although the situation remains fluid.
