EconomyInflation
Wholesale inflation jumps to 11.39% in September, highest in the new series
Fuel, food and factory goods all got dearer. Crude oil and gas prices at the wholesale level were 57% higher than a year ago, and the print beat what economists had expected.
Key points
- Wholesale price inflation rose to 11.39% in September from 9.92% in August.
- Fuel and power prices were up 25.85% from a year earlier, led by crude oil and natural gas.
- Manufactured products, nearly two-thirds of the index, rose 9.76%, a series high.
Wholesale prices in India rose at their fastest pace in the current series in September, as costlier fuel spread through food and factory goods. Inflation measured by the wholesale price index (WPI) climbed to 11.39% from 9.92% in August, provisional data from the commerce ministry showed on Wednesday.
The figure is the highest since the index moved to its new 2022-23 base, and it came in well above forecasts. After the August print, India Ratings and Research had pencilled in 10.2% for September and ICRA a range of 9.5% to 10%. The index itself rose to 112.5 from 110.8 a month earlier.
Fuel leads the climb
Fuel and power prices were 25.85% higher than a year earlier, up from 22.93% in August. Within the group, crude petroleum and natural gas jumped 57.32%, from 34.41% the month before, and mineral oils, the refined fuels group, rose 40.02%. Coal and lignite inflation rose to 9.31% from 1.57%. Electricity was the only part of the group still cheaper than a year ago, down 0.43%.
The pressure tracks the West Asia war. Brent crude was trading at about $106 a barrel on Wednesday, after weeks of tanker strikes in and around the Strait of Hormuz.
Food and factory goods
Food also got dearer. The WPI food index rose 8.66% from 7.05%, and food articles, the raw produce sold in wholesale markets, rose 8.14%, a 21-month high, from 5.67%. Manufactured food products eased slightly to 9.44%.
The bigger worry for economists is the factory floor. Manufactured products, which carry 63.1% of the index weight, rose 9.76%, up from 8.37% and the highest in the series. Basic metals were up 16.96%, chemicals 16.74%, textiles 13.85% and rubber and plastic products 13.47%. Even computers and electronics turned positive at 4% after several months of falling prices.
Primary articles as a whole rose 8.67%, also a series high, with minerals at 9.51%. Non-food articles cooled to 10.28% from 14.79%.
The newer producer price index for goods, which the ministry publishes alongside the WPI, also showed inflation of 11.39%, up from 9.81% in August.
Markets and the RBI
Traders read the number as a sign that price pressure is broadening. “A hotter-than-expected domestic WPI print pushed bond yields higher,” said Vinod Nair, head of research at Geojit Investments, adding that it raised concerns about tighter monetary policy. The Sensex closed 252 points lower.
The wholesale figure lands two days after retail inflation jumped to 5.54% in September from 4.83%. Wholesale price rises tend to pass through to shop shelves with a lag, as manufacturers and traders push higher costs on to buyers.
The Reserve Bank of India raised its repo rate by 25 basis points to 5.50% on 7 October, its first increase since February 2023. Its Monetary Policy Committee next meets from 2 to 4 December, by which time it will have October’s retail and wholesale numbers in hand.