The Wholesale Price Index (WPI)-based inflation, which had quickened to 1.8% in January after a rare contraction toward mid-2025, is expected to accelerate further in the coming months due to high input costs, economists said, adding that continuing tensions in the Gulf region pose upside risks.”Looking ahead, elevated energy prices are likely to exert upward pressure on WPI inflation as input costs rise,” said Rajani Sinha, chief economist, CareEdge Ratings.
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India Ratings and Research expects WPI inflation to jump to 3.7% in March due to a rise in crude oil prices while ICRA estimates around 3.2%. As per CareEdge Ratings, WPI inflation is expected around 3.5% in FY27, assuming Brent crude prices average between $60 and 70/bbl.
The WPI, which measures the prices of 697 items and is heavily tilted by weighting toward manufactured goods, stood at 2.5% in February 2025.
In Lockstep with CPI
Goldman Sachs has predicted Brent crude to settle around ‘low 70s’ a barrel toward the latter half of the year from around $85 a barrel in April should the West Asia crisis end soon, Reuters reported, citing the Wall Street powerhouse.
The latest rise in the gauge mirrors a similar movement in retail inflation, which quickened to 3.2% in February from 2.7% in January, largely due to a low-base effect and rising food prices.
Manufacturing products, which account for 64.23% of the WPI basket, edged up to 2.92% in February from 2.86% in January. Of the 22 manufactured sub-groups, 16 registered price increases, including basic metals (4.4%), textiles (3.3%), food products (1.1%), and chemical products (0.7%).
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To be sure, the retail inflation gauge, or the consumer price index (CPI), is the Reserve Bank of India’s (RBI) mandated reference frame for setting policy rates.
Madan Sabnavis, chief economist, Bank of Baroda, said revival in metal prices and a low-base effect led to an increase in input costs in February.