India's wholesale inflation rose to 11.39% in September from 9.92% in August, led by a sharp increase in fuel costs and higher food prices. Inflation in manufactured products also accelerated during the month, pointing to a broader rise in prices across commodities and industrial goods, according to provisional data released by the Ministry of Commerce and Industry on Wednesday.
The increase in wholesale prices follows a rise in retail inflation to 5.54% in September from 4.83% in August. Higher food prices drove the increase in consumer inflation, adding to pressure on household budgets.
Wholesale price index (WPI) inflation increased across all three major groups — primary articles, fuel and power, and manufactured products. The September reading was the highest among the figures reported in the ministry's data for the preceding six months.
Food Prices
Inflation in primary food articles rose to 8.14% in September from 5.67% in August. The broader WPI Food Index, which includes primary food articles and manufactured food products, recorded inflation of 8.66%, up from 7.05% a month earlier.
The index for primary food articles increased to 122.2 in September from 119.3 in August. However, inflation in manufactured food products eased to 9.44% from 9.65% over the same period.
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Fuel Costs
Fuel and power recorded inflation of 25.85% in September, compared with 22.93% in August. It remained the fastest-rising of the three major groups in the wholesale price index.
Inflation in mineral oils increased to 40.02% from 38.48%, while the rate for crude petroleum and natural gas climbed to 57.32% from 34.41%. Coal and lignite inflation also rose, reaching 9.31% against 1.57% in August.
Electricity prices remained below their year-earlier levels, with inflation at -0.43% in September, compared with -1.73% in August.
Manufacturing Costs
Inflation in manufactured products accelerated to 9.76% in September from 8.37% in August. Basic metals recorded inflation of 16.96%, up from 10.88%, while chemicals and chemical products rose to 16.74% from 14.30%.
Textile inflation increased to 13.85% from 12.63%. Rubber and plastic products recorded inflation of 13.47%, compared with 11.18% in August.
The overall WPI index rose to 112.5 in September from 110.8 in August. The September figures are provisional and were compiled using a weighted response rate of 83.4%, the ministry said.
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RBI Outlook
Reserve Bank of India Governor Sanjay Malhotra said the central bank looks beyond headline inflation to assess underlying price trends and the factors driving price increases.
“Headline alone may not be the right measure,” Malhotra said at the RBI's post-monetary policy press conference on Oct. 7. He said the central bank also examines core inflation and diffusion indices to understand the direction of underlying inflation.
Malhotra said future policy decisions would depend on changing economic conditions and the balance between growth and inflation. He reiterated that price stability, while keeping growth in view, remained the RBI's primary mandate.
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