Fuel, Food Costs Push Wholesale Inflation to 9.68%, More Price Pressure Ahead

India's wholesale inflation surged to 9.68 per cent in May , climbing sharply from 8.26 per cent in April , as rising fuel costs, higher food prices and increasing manufacturing expenses intensified price pressures across the economy.

The latest data released by the Commerce and Industry Ministry on Monday also marked the introduction of a revised Wholesale Price Index (WPI) series, with the base year updated to 2022-23 from 2011-12 , providing a more current picture of price trends.

The biggest contributor to the surge was the fuel and power category, where inflation jumped to 30.33 per cent in May from 24.89 per cent a month earlier. Inflation in crude petroleum rose further to 61.51 per cent , compared with 56.31 per cent in April, reflecting the impact of soaring global energy prices.

The spike comes amid continuing tensions in West Asia and disruptions linked to the effective blockade of the Strait of Hormuz , a key global shipping route through which much of India's imported crude oil passes. The resulting increase in energy costs has begun spreading across sectors, raising transportation, production and distribution expenses.

Food inflation also edged higher, with inflation in food articles rising to 3.60 per cent from 2.43 per cent in April. Meanwhile, inflation in manufactured products increased to 7.48 per cent , up from 6.68 per cent , indicating that industries are facing mounting input cost pressures.

The rise in wholesale inflation follows an increase in retail inflation as well. India's Consumer Price Index (CPI) inflation climbed to a 16 month high of 3.93 per cent in May , compared with 3.48 per cent in April, suggesting that producer-level price increases may gradually filter through to consumers.

Economists warn that if elevated wholesale prices persist, businesses may pass on a larger share of their costs to customers in the coming months. Higher fuel and energy expenses affect nearly every sector, from agriculture and logistics to manufacturing and consumer goods, increasing the likelihood of broader price increases.

The trend could also complicate the outlook for the Reserve Bank of India (RBI). While the central bank primarily targets retail inflation, sustained wholesale price pressures often serve as an early indicator of future consumer inflation. Earlier this month, the RBI raised its inflation forecast for the current financial year to 5.1 per cent from 4.6 per cent , citing rising global energy costs and their impact on domestic fuel prices.

With petrol and diesel prices having risen by Rs 7.50 per litre during the second half of May, policymakers now face the challenge of balancing inflation control with economic growth. Much will depend on global crude oil prices and geopolitical developments, which remain key risks to India's inflation outlook in the months ahead.