Sharp rise in crude oil, petrol and diesel prices pushed wholesale inflation sharply higher in April, with fuel and power inflation soaring to 24.71 per cent amid escalating West Asia tensions and supply disruptions
India’s wholesale inflation rose sharply to a 42-month high of 8.3 per cent in April, driven by a steep increase in fuel and energy prices amid rising global crude oil costs and supply disruptions linked to the West Asia crisis.
Data released by the Ministry of Commerce and Industry on Thursday showed Wholesale Price Index (WPI)-based inflation climbed from 3.88 per cent in March. The rise was led by higher prices of mineral oils, crude petroleum, natural gas and basic metals.
Inflation in the fuel and power category surged to 24.71 per cent in April from 1.05 per cent in the previous month. Crude petroleum and natural gas prices recorded a sharp increase, while petrol and diesel inflation also accelerated significantly at the wholesale level.
Petrol inflation rose to 32.40 per cent in April from 2.50 per cent in March, while high-speed diesel inflation climbed to 25.19 per cent from 3.26 per cent. LPG inflation stood at 10.92 per cent against a contraction of 1.54 per cent in the previous month.
The increase in wholesale inflation comes amid disruptions in global energy markets following tensions in West Asia and restrictions around the Strait of Hormuz, a key route for India’s crude oil imports. Despite higher global crude prices, retail rates of petrol, diesel and domestic LPG have largely remained unchanged, although commercial LPG cylinder prices have been increased.
Input Cost Pressures Rise
Inflation in primary articles rose to 9.17 per cent in April, while manufactured products inflation increased to 4.62 per cent, indicating higher input costs across sectors such as metals, chemicals, textiles and machinery.
Among manufactured products, inflation in basic metals stood at 7 per cent, textiles at 7.3 per cent and chemicals and chemical products at 5.09 per cent.
Food inflation remained relatively moderate during the month. Inflation in food articles edged up to 1.98 per cent in April from 1.90 per cent in March, while the WPI Food Index rose to 2.31 per cent from 1.85 per cent.
PHD Chamber of Commerce and Industry said higher energy and petroleum prices contributed to rising input costs across manufacturing segments.
“Going forward, movements in global energy prices, commodity markets and supply chain conditions will remain important determinants of wholesale price trends. The evolving trajectory of fuel costs and transmission into manufacturing and transport sectors will continue to be monitored closely in the coming months,” said Ranjeet Mehta, Secretary General and CEO, PHDCCI.
According to Bajaj Broking, the sharp rise in wholesale inflation indicates increasing price pressures across the economy due to higher crude oil prices, imported inflation and elevated logistics and freight costs.
“Higher logistics, freight, and commodity prices are now increasingly getting reflected in wholesale inflation, which could eventually pass through to consumer inflation as well,” said Shashwat Singh, Fundamental Analyst at Bajaj Broking.
He added that sustained increases in input costs could put pressure on margins of manufacturing and industrial companies if the higher costs are not fully passed on to consumers.
The provisional WPI index for all commodities stood at 167 in April compared with 160.8 in March. On a month-on-month basis, headline WPI rose 3.86 per cent, with the fuel and power segment registering an 18.22 per cent increase.
