India’s surged to a 42-month high of 8.3% in April from 3.88% in March, driven by a spike in energy prices following disruptions caused by the West Asia conflict. In comparison, the wholesale price index (WPI) inflation stood at 0.85% in April last year.
Fuel and power inflation jumped to 24.71% in April from 1.05% in March, emerging as the biggest contributor to headline wholesale inflation, according to DPIIT data.
Crude petroleum and natural gas prices rose 16.42% sequentially. Inflation in the category surged to 67.18% year-on-year in April, with crude petroleum inflation alone rising to 88.06%.
According to global brokerage Barclays, the sequential increase in WPI inflation was the highest on record in the series.
But will the rise in WPI actually burn a hole in the pockets of consumers?
How is WPI linked to household expenses?
Noting that WPI inflation does not directly affect household expenses, Rumki Majumdar, Economist, Deloitte India, said, “A high WPI does not often translate into a high CPI, especially during periods of macroeconomic uncertainties or external shocks; the correlation between the two variables is quite weak.”
This is because the two indices measure different things — is driven more by food and services prices, while WPI is more affected by manufacturing and fuel costs, both of which have risen after the Middle-East crisis.
Also, there is usually a delay before cost pressures are fully passed on to consumers. “Government interventions such as fuel tax cuts and subsidies will soften retail inflation for some time. That explains the divergence in April 2026 numbers as WPI inflation rose sharply to 8.3%, while CPI inflation remained relatively moderate at 3.48%.”
Who is likely to be impacted?
Imported inflation is expected to push WPI inflation sooner, owing to crude petroleum and natural gas inflation (up 67.2%) and fuel and power inflation (up 24.7%), along with currency depreciation.
“Firms dependent on imported raw materials, such as chemicals, electronics, and auto components, are likely to face margin pressures as input costs rise faster than they can be passed on to consumers,” Majumdar informed.
Can rising wholesale inflation influence RBI policy decisions and, in turn, affect loan EMIs?
“RBI is expected to remain on hold in the near term despite the recent spike in wholesale inflation, as retail inflation at 3.48% in April 2026 remains below the RBI’s 4% medium-term target,” asserted Majumdar.
“However, concerns about imported inflation, elevated crude oil prices, geopolitical tensions, rupee depreciation, and potential weather-related food inflation risks are increasing expectations of a possible rate-hike cycle later in the year.”
The RBI will be watchful of how CPI moves before deciding on any tightening of the monetary policy cycle, she concluded.