New WPI Series Shows India Wholesale Inflation At 9.68% In May

India’s wholesale inflation stood at 9.68% in May under a newly launched Wholesale Price Index (WPI) series, driven by a sharp rise in fuel and manufacturing costs as global crude oil prices remained elevated amid the ongoing US-Iran conflict.

It followed April’s 8.26% wholesale inflation print under the previous WPI series, which had marked a 42-month high. The government on Monday released the first inflation data under the revised WPI framework, which uses 2022-23 as the base year instead of 2011-12.

Fuel Prices Lead Inflation Rise

Fuel and power inflation accelerated to 30.33% in May from 24.89% in April. Inflation in crude petroleum and natural gas surged 61.51%, reflecting the impact of higher global energy prices. The increase came as tensions in the Middle East disrupted supply chains and pushed up crude prices.

State-run fuel retailers raised fuel prices four times during May. The hikes increased transportation costs across sectors and added to wholesale price pressures. Food inflation also moved higher. Wholesale food prices rose 4.49% in May compared with 3.11% in April.

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Government Launches New Inflation Framework

Alongside the inflation release, the government introduced a Producer Price Index (PPI) and rolled out a revised WPI series in one of the biggest overhauls of India's inflation measurement system. The updated WPI expands commodity coverage to 957 items from 697 earlier.

The revised framework includes renewable energy sources such as solar and wind power, along with nuclear power. Crude oil and natural gas have been shifted from the primary articles category to the fuel and power group, broadening the measure of energy prices.

Sources:

The Economic Times

CNBC TV18