India's wholesale inflation reaches a record high in September

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Wholesale inflation reaches a record high in September

Highlights

India's wholesale price index (WPI)-based inflation reached 11.39% in September, up from 9.92% in August.
Inflation in the fuel and power segment stood at 25.85%, while crude petroleum and natural gas prices recorded a year-on-year jump of 57.32%.
Inflation in manufactured products reached 9.76%, and the output producer price index at the factory gate rose from 110.8 to 112.5.

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Cost pressures intensify in September data

According to Forbes India, government data released on Wednesday showed that wholesale price index (WPI)-based inflation rose to 11.39% in September from 9.92% in August. The jump comes as higher prices for fuel, food and industrial inputs are passing through broadly across the economy.

The fuel and power segment remained the hottest, with inflation rising to 25.85% from 22.93% in August. Mineral oil prices increased 40.02% year-on-year, while crude petroleum and natural gas recorded a 57.32% jump; inflation in coal and lignite rose to 9.31% from 1.57%, while electricity prices declined by 0.43%.

Inflation in primary articles rose to 8.67% from 7.76%. Food inflation accelerated to 8.14% from 5.67%, although non-food inflation eased to 10.28% from 14.79%; the broader WPI food index, which has a weighting of about 25%, increased by 8.66%, compared with 7.05% in August.

Impact on manufacturing and producer prices

Inflation in manufactured products, which account for more than 63% of the index, rose to 9.76% from 8.37% in August. Basic metals, chemicals, textiles, rubber and plastics, and electrical equipment remained key pressure points, while computer, electronic and optical products returned to positive growth of 4% after several months of declines.

For the April-to-September period of FY 2026-27, cumulative WPI inflation stood at 9.85%, compared with a 0.20% contraction in the same period last year. Cost pressures also increased at the factory gate, where the output producer price index rose from 110.8 to 112.5.

Within the producer price index, mining and quarrying recorded the sharpest monthly increase, rising from 122 to 129.2, while agriculture, forestry and fishing increased from 116.5 to 118.7. Manufactured products rose from 109.7 to 111, and electricity increased from 90.9 to 92.

The experimental trial input PPI for the manufacturing sector also rose from 104.2 in August to 106.1, although it remained below the May peak of 106.5. The recovery was led by coke and refined petroleum products, which rebounded from 86.7 to 94.7, while input costs for chemicals, basic metals and electrical equipment also remained elevated.

Our previous report discussed the RBI's higher GDP growth and CPI inflation forecasts for FY27 and a 25-basis-point increase in the repo rate, along with a “calibrated tightening” stance. It highlighted concerns over broadening food and fuel inflation due to a weak monsoon, high commodity and energy prices, and supply-chain costs, as well as the impact on bond yields and measures such as OMOs and other steps to drain liquidity and stabilise the rupee.

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