8.3%: April wholesale prices rose most in 42 months as Iran war pain deepens
While consumer prices have not risen much since the war began, wholesale prices are showing the true state of the Indian economy.
Wholesale prices in India jumped 8.3% year-on-year in April as against an increase of 3.88% in March as the impact of the West Asia war mounted sharply, with producers bearing the brunt of the cost. According to data released by the commerce ministry on Thursday, inflation based on the Wholesale Price Index (WPI) in April was the highest in 42 months, with energy related items witnessing an unprecedented rise in prices and contributing almost three-fourth of the increase in inflation from March.
Wholesale price of Aviation Turbine Fuel, or ATF, more than doubled in April from March, with naphtha, furnace oil, and bitumen seeing prices rise 67%, 46%, and 39% on a month-on-month basis.
Naphtha is used in a variety of industries, including plastics and paints. Bitumen is used to make roads.
Meanwhile, wholesale price of petrol was 24% higher in April compared to March, high-speed diesel 17%, natural gas 15%, kerosene 12%, and LPG 10%.
Among common everyday items, the largest month-on-month price increases were seen for plastic tape (12%), aluminium foil (7%), plastic bags (5%), and cigarettes (5%).
The wholesale price numbers come two days after the statistics ministry released retail data for April, which showed that Consumer Price Index (CPI) inflation rose very slightly to 3.48% year-on-year from 3.4% in March, as the government’s effort to protect households from the West Asia energy price shock continued to bear results. However, signs of producers passing on some of their highest costs to consumers have begun to emerge, with the price of dining out rising sharply in April compared to March.
“The first sign of the impact of war on the Indian economy has been seen in the WPI inflation number for April,” said Madan Sabnavis, Chief Economist at Bank of Baroda.
“While WPI inflation is not a target for MPC, it is known that with a lag, these prices also get transmitted to the CPI component through higher input costs. Therefore, these numbers remain important for policy formulation. They also indicate the pressure that is being exerted on the government to raise prices at the retail end,” Sabnavis added.
According to Rajani Sinha, Chief Economist at CareEdge Ratings, the rise in wholesale inflation – which she expects will average 7.8% in FY27 as against 0.7% in FY26 – raises the risk of second-round effects “gradually spilling into retail inflation”.
“So far, OMCs and the government have absorbed much of the rise in crude prices, but a prolonged period of elevated oil prices may lead to some pass-through to consumers. Additionally, concerns around a higher probability of an El Nino event this year pose upside risks to food inflation,” Sinha added.
Second-round effects refer to the spreading of a specific price shock through the rest of the economy. For instance, if fuel prices at the pump rise, it could lead to a rise in taxi fares and transportation costs for workers. In turn, they might demand higher wages from employers, which could result in producers raising selling prices of the goods and services they make.
While wholesale food inflation was muted at 2.31% in April, all other categories notched up significant price increases. Primary articles inflation – the year-on-year change in prices – rose to 9.17% from 6.36% in March, fuel and power inflation skyrocketed to 24.71% from 1.05%, and inflation for manufactured products increased to 4.62% from 3.39%.
And while wholesale food inflation was subdued, it was because outliers at both extremes cancelled each other out. However, a crash in the prices of key vegetables such as onion (down 5% from March) is putting the rural economy in stress, with onions fetching just 50 paise per kilogram in the Satana Agricultural Produce Market Committee in Nashik, Maharashtra. While unseasonal rain has hit the quality of onion and led to lower prices, the war in West Asia has hurt export demand.
The ‘fuel and power’ category, which makes up 13% of the entire WPI, saw its inflation rise to 18.22% in April from 4.2% in March.
On the manufacturing front, chemicals pose the biggest challenge. Chemicals such as phthalic anhydride (up 22% from March), ammonia liquid (19%), ammonium nitrate, nitric acid (both 15%), and mono ethyl glycol (12%) all saw sharp price increases from March. Manufacturing food products also became more expensive, primarily due to dearer edible oils – Prime Minister Narendra Modi earlier this week called on the country to reduce its oil consumption.
As a result, core inflation – which measures the year-on-year change in prices after excluding food and fuel items, whose prices are volatile – surged more than a percentage point to 5% in April.
Wholesale prices in India jumped 8.3% year-on-year in April as against an increase of 3.88% in March as the impact of the West Asia war mounted sharply, with producers bearing the brunt of the cost. According to data released by the commerce ministry on Thursday, inflation based on the Wholesale Price Index (WPI) in April was the highest in 42 months, with energy related items witnessing an unprecedented rise in prices and contributing almost three-fourth of the increase in inflation from March.
Wholesale price of Aviation Turbine Fuel, or ATF, more than doubled in April from March, with naphtha, furnace oil, and bitumen seeing prices rise 67%, 46%, and 39% on a month-on-month basis.
Naphtha is used in a variety of industries, including plastics and paints. Bitumen is used to make roads.
Meanwhile, wholesale price of petrol was 24% higher in April compared to March, high-speed diesel 17%, natural gas 15%, kerosene 12%, and LPG 10%.
Among common everyday items, the largest month-on-month price increases were seen for plastic tape (12%), aluminium foil (7%), plastic bags (5%), and cigarettes (5%).
The wholesale price numbers come two days after the statistics ministry released retail data for April, which showed that Consumer Price Index (CPI) inflation rose very slightly to 3.48% year-on-year from 3.4% in March, as the government’s effort to protect households from the West Asia energy price shock continued to bear results. However, signs of producers passing on some of their highest costs to consumers have begun to emerge, with the price of dining out rising sharply in April compared to March.
“The first sign of the impact of war on the Indian economy has been seen in the WPI inflation number for April,” said Madan Sabnavis, Chief Economist at Bank of Baroda.
“While WPI inflation is not a target for MPC, it is known that with a lag, these prices also get transmitted to the CPI component through higher input costs. Therefore, these numbers remain important for policy formulation. They also indicate the pressure that is being exerted on the government to raise prices at the retail end,” Sabnavis added.
According to Rajani Sinha, Chief Economist at CareEdge Ratings, the rise in wholesale inflation – which she expects will average 7.8% in FY27 as against 0.7% in FY26 – raises the risk of second-round effects “gradually spilling into retail inflation”.
“So far, OMCs and the government have absorbed much of the rise in crude prices, but a prolonged period of elevated oil prices may lead to some pass-through to consumers. Additionally, concerns around a higher probability of an El Nino event this year pose upside risks to food inflation,” Sinha added.
Second-round effects refer to the spreading of a specific price shock through the rest of the economy. For instance, if fuel prices at the pump rise, it could lead to a rise in taxi fares and transportation costs for workers. In turn, they might demand higher wages from employers, which could result in producers raising selling prices of the goods and services they make.
While wholesale food inflation was muted at 2.31% in April, all other categories notched up significant price increases. Primary articles inflation – the year-on-year change in prices – rose to 9.17% from 6.36% in March, fuel and power inflation skyrocketed to 24.71% from 1.05%, and inflation for manufactured products increased to 4.62% from 3.39%.
And while wholesale food inflation was subdued, it was because outliers at both extremes cancelled each other out. However, a crash in the prices of key vegetables such as onion (down 5% from March) is putting the rural economy in stress, with onions fetching just 50 paise per kilogram in the Satana Agricultural Produce Market Committee in Nashik, Maharashtra. While unseasonal rain has hit the quality of onion and led to lower prices, the war in West Asia has hurt export demand.
The ‘fuel and power’ category, which makes up 13% of the entire WPI, saw its inflation rise to 18.22% in April from 4.2% in March.
On the manufacturing front, chemicals pose the biggest challenge. Chemicals such as phthalic anhydride (up 22% from March), ammonia liquid (19%), ammonium nitrate, nitric acid (both 15%), and mono ethyl glycol (12%) all saw sharp price increases from March. Manufacturing food products also became more expensive, primarily due to dearer edible oils – Prime Minister Narendra Modi earlier this week called on the country to reduce its oil consumption.
As a result, core inflation – which measures the year-on-year change in prices after excluding food and fuel items, whose prices are volatile – surged more than a percentage point to 5% in April.
