India's Wholesale Inflation Hits Series-High 11.39% in September, Up From 9.92% in August

Since the Iran war and the blockade of the Strait of Hormuz began driving up energy costs, the damage has moved well past the gas pump, and Wednesday's data from New Delhi shows how far.

India's wholesale price index (WPI) inflation rose to 11.39% in September from 9.92% in August, according to government data released today, Oct. 14. That is the highest reading in the current WPI series, which uses 2022-23 as its base year and only goes back to April 2024. The Hindu reports it is also a 49-month high on the older 2011-12 series.

What drove the jump

Fuel and power inflation climbed to 25.85% from 22.93%. Manufactured products hit a series-high 9.76%, up from 8.37%. The WPI food index rose to 8.66% from 7.05%.

Within energy, mineral oils ran at 40% and crude petroleum and natural gas at 57.3%. The all-commodities index stood at 112.5, up from 110.8 in August.

Rahul Agrawal, principal economist at ICRA, said non-food manufactured goods accounted for more than half of the 147 basis point rise in the headline figure from August. He tied that to input costs passing through to finished goods.

India imports most of its crude through Hormuz. The war and the resulting blockade have pushed up global crude and fertiliser costs, which then spilled into food and commodity prices, according to the PTI data release.

More pain forecast

ICRA expects WPI inflation to reach 12% in October and stay in double digits through the third quarter of FY2027. Agrawal cited persistent global energy and commodity prices and an adverse base effect.

Barclays said in a research note that wholesale and producer price inflation "may accelerate in coming months" with international energy and metal prices elevated. Output producer prices rose 11.4% year on year in September, from 9.8% in August.

Retail inflation is already following. India's consumer price inflation hit 5.54% in September from 4.83% in August, a 23-month high, according to government data released earlier this week.

Not all of it is new pressure

The picture has some qualifiers. The Hindu notes that fuel and power inflation, while high, was the highest in only three months. The rate was higher in both May and June.

The food articles component rose to 8.1% from 5.7%, but off a low base. Prices in that category contracted 6.8% in September last year. Non-food primary articles inflation, at 10.3%, was the lowest in four months.

Ranjeet Mehta, secretary general of the PHD Chamber of Commerce and Industry, said wholesale price moves do not translate directly into retail inflation. He added that their persistence could weigh on corporate margins, working-capital needs and investment decisions. Anil Gupta, the chamber's president, urged businesses to monitor input costs closely and improve energy efficiency and procurement planning.

The U.S. details behind the headline

The U.S. September CPI figure of 3.7% is already in the record. The breakdown shows the same pattern of spread.

Core CPI, which strips out food and energy, rose 0.3% from August and 2.6% from a year earlier, according to the Bureau of Labor Statistics. Economists had expected 0.2% and 2.5%, after a five-year low of 2.4% the prior month. Shelter rose 0.4% on the month, the fastest pace in five months.

Gasoline's 9.1% jump accounted for more than half of the monthly increase. Heather Long, chief economist at Navy Federal Credit Union, said used cars, airfares, recreation, medical care and apparel are also rising. "It's this more broad-based problem than just a gas price spike," she said.

Inflation has now outpaced wage growth for six straight months, per the BLS data.

The Fed's next move

Stock futures fell and bond yields surged after the report, reinforcing expectations that rates stay higher for longer.

Jeff Schulze, head investment strategist at Franklin Templeton Institute, wrote that the broadening of price pressures "bolsters the case for additional rate hikes." He also noted that recent comments from Fed officials suggest the bar for a hike at the central bank's meeting later this month could be high.

The next data point is India's October WPI, which ICRA forecasts at 12%. The Fed's decision on rates comes at its meeting later this month.