WPI inflation edges higher to 9.9% in August, fuel leads rise

Wholesale prices in India surged to 9.9% year-on-year in August, driven by fuel, power, and manufactured goods, according to official data. The Wholesale Price Index (WPI)-based inflation remained unchanged at zero in August 2025. Devendra Pant, chief economist at India Ratings and Research, noted that unresolved geopolitical tensions in the Middle East could keep global uncertainty high in the near term.

This, combined with poor rainfall and a weaker currency, is expected to push inflation higher in the coming months. Fuel and power prices led wholesale inflation, surging to 22.9% in August from 20.1% in July, with mineral oil prices climbing by 38.5% and crude petroleum and natural gas prices rising to 34.4% from 27%. Despite electricity prices falling, the increase in crude petroleum prices due to the West Asia crisis is expected to keep fuel and power inflation elevated until a solution is found.

Inflation in manufactured products rose slightly to 8.4% in August from 8.3% in July, while primary article prices eased to 7.8% from 8.5%. Within manufacturing sub-groups, chemical products, tobacco, and textiles saw elevated inflation, while food inflation hit a 20-month high of 7.1% in August. Looking ahead, Pant predicts food inflation will rise further in September-October due to unfavorable base effects and strong price increases in items like sugar, potentially impacting festive season sentiment.

The producer price index also grew to 9.8% year-on-year in August from 9.6% in July, and a preliminary input PPI for manufacturing fell to 104.2 from 105.9, indicating a 1.6% decline. Pant anticipates wholesale inflation to reach 10.2% in September and remain elevated through 2026 unless the West Asia crisis is resolved.