The Wholesale Price Index (WPI)-based inflation stood at 0.9% in April 2025.
“The West Asia conflict leading to higher prices of crude and its derivatives, as well as the potential El Nino effect continue to pose upside risk to inflation,” said Megha Arora, director at India Ratings and Research (Ind-Ra).
Ind-Ra expects inflation to climb to 9% in May, while ICRA projects it could rise above that.
Rahul Agrawal, senior economist at ICRA, noted that food prices strengthened in early May relative to April, in line with the seasonal trend, which is likely to further increase food inflation this month. Alongside, the continued pass-through of elevated energy and commodity prices, as well as the depreciation in the USD/INR pair, is expected to push up the WPI reading for May, he added.
The increase in WPI highlights the effect of the West Asia conflict and disruptions in the Strait of Hormuz, a key route for India’s crude oil imports.
Inflation in the fuel & power segment jumped to 24.7% year-on-year in April from 1.1% in March. Crude petroleum prices spiked to 88.1% from 51.6% a month earlier.Prices of petrol (32.4%), diesel (25.2%) and Liquefied Petroleum Gas (10.9%) rose sharply, highlighting supply-side pressures.
Even though global crude oil prices jumped 50%, the government has maintained retail fuel and domestic LPG prices at existing levels to protect consumers from rising costs. However, commercial LPG cylinder prices have been raised.
Input costs also rose for several industrial products, including sulphuric acid (61%), brass metal/sheet/coils (23.5%), copper wire (20.9%), aluminium powder (26.1%) and aluminium alloys (14.8%).
Core WPI (non-food manufactured items) inflation rose to a 43-month high of 5% in April.
Meanwhile, retail inflation also edged up to 3.5% in April compared with 3.4% in March, mainly due to rising food and gold/silver prices.
Manufacturing, food
Manufactured products, which account for 64.23% of the WPI basket, saw inflation rise to 4.6% in April from 3.4% in March. Out of 22 manufactured sub-groups, 21 recorded price increases, including textiles (7.3%), basic metals (7%) and chemical products (5.1%).
“High global metal prices, the potential El Nino effect, and the overall higher cost of imported inputs are likely to keep inflation in this segment high in the coming months,” said Arora.
Inflation in primary articles increased to 9.2% in April from 6.4% in March. Food, which accounts for around a quarter of the WPI basket, increased 2.3% from 1.9%.
Among key food categories, cereals and pulses prices declined by 0.3% and 4%, respectively. However, vegetable prices rose 0.5%, even though potato and onion saw sharp declines of 30% and 26.5%, respectively.
