India’s wholesale inflation surges to 9.68% in May, highest in over a year as fuel prices jump 30%

India’s wholesale inflation accelerated sharply in May, with rising fuel, food and manufacturing costs pushing the Wholesale Price Index (WPI)-based inflation rate to 9.68%, exceeding market expectations and marking a significant jump from 8.3% in April.

Data released by the Ministry of Commerce and Industry on Monday showed that wholesale price pressures remained broad-based, led by a steep increase in energy costs amid prolonged geopolitical tensions in West Asia. The latest reading was also higher than economists’ estimates of around 9.1%, underscoring the persistence of input cost pressures across sectors.

Fuel and power inflation emerged as the biggest contributor to the rise in wholesale prices, climbing to 30.33% in May from about 24.8% in the previous month. The increase comes against the backdrop of elevated global crude oil prices during the three-month-long West Asia crisis, which only recently witnessed a temporary easing following a ceasefire understanding between the US and Iran.

Food prices also witnessed an uptick, with food inflation rising to 4.49% from 3.11% in April. Inflation in primary articles—which include commodities such as minerals, crude petroleum, food items and non-food agricultural products—increased to 4.99% from 3.78% a month earlier.

Meanwhile, inflation in manufactured products, which account for the largest share in the wholesale price basket, rose to 7.48% in May from 6.68% in April. Mineral oils, crude petroleum and natural gas, chemicals, and basic metals were among the key contributors to the increase in producer prices, indicating that higher input costs are continuing to filter through the industrial economy.

New WPI series broadens commodity basket

The May inflation print was released under the government’s revised WPI series with 2022-23 as the base year, replacing the earlier 2011-12 series. The Office of the Economic Adviser has simultaneously introduced new Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI) and Service Producer Price Indices for select sectors.

The revised framework reflects structural shifts in the economy and expands the WPI basket to 957 items from 697 earlier, while also incorporating emerging energy sources such as solar, wind and nuclear power. According to PHD Chamber of Commerce and Industry (PHDCCI), the updated methodology and wider coverage will provide a more accurate picture of producer-level price movements and improve inflation monitoring across sectors.

PHDCCI President Rajeev Juneja said the launch of the new WPI and PPI series marks an important modernisation of India’s price statistics framework. The chamber also noted that recently announced progress in US-Iran negotiations and the proposed reopening of the Strait of Hormuz could help ease energy market concerns.

Brent crude prices have already retreated on expectations of improved supplies and lower geopolitical risks. Given that fuel and power inflation was the principal driver of May’s WPI spike, a sustained decline in global oil prices could help moderate cost pressures across transport, chemicals, metals and other energy-intensive industries in the coming months.

The newly released OPPI stood at 109.6 in May, while the trial IPPI for manufacturing was recorded at 104.9. Service Producer Price Indices have also been introduced for seven sectors, including banking, insurance, telecommunications, railways and air passenger transport. According to PHDCCI, the parallel publication of WPI and PPI data over the next five years will support a gradual transition towards a producer-price framework aligned with global best practices and strengthen industry-level inflation analysis.