Wholesale Price Inflation hits record high of 9.68% in May as fuel costs spike

Wholesale price inflation shot up to a record 9.68 per cent in May, from 8.26 per cent in April, led by a sharp spike in prices of fuel and power, reflecting the impact of energy shocks emanating from the West Asia war.

The May wholesale price index (WPI)-based inflation is the highest in the current series with a base year of 2022-23.

The Commerce and Industry Ministry on Monday released the May WPI-inflation data, revising the base year to 2022-23, from 2011-12 earlier — the first revision in nine years. The total number of items in the new WPI basket has increased from 697 to 957. New sources of energy, such as solar and wind, have been added under the ‘electricity’ group. In addition, nuclear electricity has been included in the basket.

The ministry also released the producer price indices (PPI) for the first time to track output and input factory gate prices. Besides, Services PPI was released for seven services — Banking, Securities Transaction, Management of Pension Funds, Insurance, Railways, Air (Passenger), and Telecom.

The Government intends to discontinue with WPI data in the next five years and shift to PPI, in alignment with the global best practice.

“Availability of both the Output PPI and Input PPI gives a better understanding of the price movements of output produced vis-a-vis inputs being used in an industry. It also explains how inflation experienced by producers on inputs is passed on to the output being produced,” the ministry said.

WPI INFLATION DATA FOR MAY: “Across groups, mineral oil (containing petroleum products), crude petroleum and natural gas, manufacture of chemicals and chemical products, and manufacture of basic metals have been major drivers of WPI inflation in April and May 2026,” the commerce ministry said.

The fuel and power segment, which now accounts for 14.1 per cent of the WPI by weight and also includes the crude petroleum and natural gas groups, witnessed a sharp rise in the inflation rate to 30.33 per cent in May, from 24.89 per cent in April 2026, reflecting the continued passthrough of elevated global energy prices.

Inflation in crude petroleum was 61.51 per cent in May, as against 56.31 per cent in the previous month.

The sharp rise in WPI inflation reflects the impact of the West Asia crisis and the effective blockade of the Strait of Hormuz, through which the majority of the crude oil is imported to India, and its spillover effect on food prices.

Inflation in food articles was 3.60 per cent in May, compared to 2.43 per cent in April. In manufactured products, inflation rose to 7.48 per cent in May, from 6.68 per cent during April, data showed.

EXPERTS REACTION: ICRA Principal Economist Rahul Agrawal said the recent cooling in global energy and commodity prices after the easing of tensions in West Asia is expected to provide respite to the WPI inflation print for June 2026.

India Ratings and Research, Director, Megha Arora, said WPI inflation in June 2026 is likely to decelerate marginally to 9.3 per cent with easing global crude prices following news of de-escalation in the West Asia conflict.

However, it will take some time for WPI inflation to fall below 2.5 per cent, a level seen during pre-West Asia conflict.

“Besides, the 2026 monsoon is under the shadow of El Nino, and would keep food prices elevated in the near-term. Inflation based on WPI is expected to be higher than CPI on account of the higher weight of fuels in the index,” Arora said.

RETAIL INFLATION FOR MAY: Wholesale inflation continued to be much higher than the retail or consumer price index-based inflation for the second consecutive month.

Retail inflation had surged to a 16-month high of 3.93 per cent in May, as against 3.48 per cent in the previous month.

The Reserve Bank of India (RBI), which mainly factors in CPI when arriving at its monetary policy, has been mandated by the Government to ensure that headline inflation remains at 4 per cent, with a 2 per cent margin on either side.

Earlier this month, the RBI raised its inflation projection for the current fiscal year to 5.1 per cent from 4.6 per cent, largely due to mounting input costs, driven by the pass-through of higher global energy prices to retail petrol and diesel prices.

Rising global crude oil prices had led to a Rs 7.50-a-litre increase in petrol and diesel prices in the second half of May.