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Informist, Monday, Mar. 16, 2026

 

NEW DELHI – WPI inflation may rise to levels last seen in the financial year 2022-23 (Apr-Mar), pushed up by higher crude oil prices on the back of the US-Israel war on Iran. Economists expect WPI inflation to rise to near 4% in March, a level last seen in January 2023.

 

Data released Monday showed wholesale inflation rose to an 11-month high of 2.13% in February because of higher prices of food and manufactured products. Deflation in the fuel and power category helped keep WPI inflation in check last month.

 

"Looking ahead, elevated energy prices are likely to exert upward pressure on WPI inflation as input costs rise," Rajani Sinha, chief economist at CareEdge Ratings, said in a note. "The impact of elevated energy prices is expected to be more pronounced on WPI compared with CPI, given the higher weight of petroleum, natural gas, and mineral oil in the WPI basket (10.4%) relative to the CPI basket (4.8%)."

 

Economists at rating agency ICRA see WPI inflation around 3.2% in March while YES Bank sees it around 2.8-2.9%. Since February 2023, WPI inflation has risen above 3% just once, in June 2024. According to Devendra Pant, chief economist at India Ratings and Research, WPI inflation is likely to jump to 3.7% in March on the back of a sharp increase in prices of gas, crude oil, and crude derivatives.

 

The WPI crude petroleum index has been in deflation since August 2024, but the extent of deflation came down drastically in February. WPI crude petroleum inflation rose to (-)1.29% last month from (-)11.23% in January.

 

Since the US-Israel attack on Iran, the average price of the Indian crude basket has jumped to over $135 a barrel from nearly $70 a barrel before the attack. "This will have a strong impact on wholesale inflation from March 2026, till the supply-side issues are resolved," Pant said in a note.

 

The impact of the conflict in West Asia on manufactured products will be important as it will be the basis for transmission of higher cost to products which enter the CPI, Madan Sabnavis, chief economist at Bank of Baroda, said in a note.

 

The West Asian conflict, now in its third week, has pushed economists to raise their WPI inflation forecasts for the calendar and financial year. Pantheon Macroeconomics raised its WPI inflation forecast for 2026 to 5.0% from 2.9% previously, with the headline rate now set to peak at around 7.0% in October.

 

"The risks clearly are skewed to the upside, even after this marked revision, as the second-round effects of the upsurge in energy prices can't be ignored," Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said in a note. "That being said, it's worth mentioning that this oil-price spike is unlike the previous one in 2022, when the outbreak of war between Ukraine and Russia had a direct and immediate bearing on the global food-price complex." 

 

Sinha of CareEdge expects WPI inflation to average 0.6% in FY26 against 0.4% in Apr-Feb. Assuming Brent crude oil prices average between $60 and $70 a barrel, WPI inflation is projected to average around 3.5% in FY27, she said.  End

 

US$1 = INR 92.42

 

Reported by Shubham Rana

Edited by Rajeev Pai

 

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