Fuel prices drive wholesale inflation higher in May

India’s wholesale inflation rose to 9.68% in May from 8.26% in April on a comparable 2022-23 base, as higher fuel and power prices pushed up producer-level costs in the first monthly release under the new Wholesale Price Index (WPI) series.

The reading was higher than the 9.05% forecast in a Reuters poll of economists.

The Office of Economic Adviser under the Department for Promotion of Industry and Internal Trade released the revised WPI series with 2022-23 as the base year, replacing the older 2011-12 series.

The government also began releasing a new output producer price index (PPI), a trial input producer price index and service producer price indices for seven sectors.

Fuel and power inflation rose to 30.33% in May from 24.89% in April. Inflation in primary articles rose to 4.99% from 3.78%, while manufactured products inflation increased to 7.48% from 6.68%.

The government said mineral oils, crude petroleum and natural gas, chemicals and chemical products, and basic metals were among the main drivers of wholesale inflation in April and May.

Petroleum and natural gas prices rose 61.51% in May, government data showed.

The wholesale food index rose 4.49% in May from a year earlier, compared with 3.11% in April. The food index includes food articles from the primary articles group and manufactured food products.

The new series expands the wholesale price basket to 957 items from 697 earlier. Solar, wind and nuclear electricity have been added under the electricity group, while crude petroleum and natural gas have been moved from primary articles to fuel and power to better align energy items.

The government has also changed the way weights are calculated. The new series uses gross value of output instead of net traded value, which was used in the 2011-12 series. The government said this better reflects the domestic production significance of commodities rather than trade flows.

The release marks the beginning of a transition from the wholesale price index to producer price indices, in line with practices used in advanced economies and recommendations of the International Monetary Fund.

“Considering the wide usage of WPI in price escalation clauses, this index will be released for five years from the date of its release, along with PPI, and will be discontinued thereafter,” the government said in the release. “This would give sufficient time to users to switch from WPI to PPI.”

The output PPI and WPI will be released monthly. The trial input producer price index, currently limited to manufacturing, has been published on an experimental basis since March 2026. Service producer price indices will be released quarterly for banking, securities transactions, insurance, pension fund management, railways, passenger air transport and telecom.

The next release for wholesale prices, output producer prices and trial input producer prices, covering June 2026, is scheduled for 14 July.

The rise in wholesale inflation comes days after official data showed retail inflation also moved higher, though it remained below the Reserve Bank of India’s 4% medium-term target. Consumer price inflation rose to 3.93% in May from 3.48% in April. Rural inflation stood at 4.25%, while urban inflation was 3.53%.

Food inflation at the retail level rose to 4.78% in May from 4.20% in April. Rural food inflation was 4.85%, while urban food inflation was 4.66%. Housing inflation stood at 2.12%.

Among retail items, silver jewelry, tomato, gold, diamond and platinum jewelry, ginger, and raisins recorded some of the highest inflation rates in May. Potato, peas, motor cars and jeeps, cumin, and motorcycles and scooters were among items with the lowest inflation readings.

The divergence between wholesale and retail inflation points to sharper pressure at the producer level, especially from energy and commodity-linked inputs, even as consumer inflation remains within the central bank’s tolerance band.