NEW DELHI, Apr 15: India’s wholesale price inflation accelerated sharply in March, reaching a 38 month high of 3.88 per cent, largely driven by a steep increase in fuel, power, and manufactured goods prices amid escalating tensions in West Asia.
According to data released by the Ministry of Commerce and Industry, the Wholesale Price Index (WPI)-based inflation has now risen for the fifth consecutive month. The surge reflects intensifying cost pressures across key sectors, even as food price inflation showed signs of easing during the same period.
The spike in wholesale inflation comes in the backdrop of rising global commodity prices, particularly crude oil, following the outbreak of the US–Israel–Iran conflict that began on February 28. The conflict has significantly disrupted global energy supply chains, leading to volatility in oil markets.
Inflation in the fuel and power category recorded a notable reversal, climbing to 1.05 per cent in March from a contraction of 3.78 per cent in February. Within this segment, crude petroleum prices witnessed a dramatic rise of 51.57 per cent, compared to a marginal decline in the previous month.
Manufactured products also contributed to the upward trend, with inflation increasing to 3.39 per cent from 2.92 per cent in February. Key drivers included higher costs in basic metals, non-food articles, and other industrial goods, reflecting the cascading effect of elevated energy prices across production chains.
Despite the overall rise, food inflation provided some relief. The rate of increase in food articles slowed to 1.90 per cent in March from 2.19 per cent in February. Vegetable prices, in particular, moderated significantly, with inflation easing to 1.45 per cent compared to 4.73 per cent in the previous month.
Economists suggest that the current inflation trajectory may persist if global oil prices remain elevated. International crude prices surged to nearly USD 122 per barrel in early March, a sharp jump from around USD 75 per barrel prior to the crisis. This rapid increase has raised concerns about sustained inflationary pressure in the coming months.
In response to the rising energy costs, the government reduced excise duty on petrol and diesel by ₹10 per litre on March 26. The move aimed to cushion consumers from the immediate impact of soaring crude prices and prevent a pass-through effect on retail fuel prices.
Meanwhile, retail inflation based on the Consumer Price Index (CPI) also edged up to 3.4 per cent in March, compared to 3.21 per cent in February, driven primarily by select food items.
The Reserve Bank of India has maintained a cautious stance, keeping its benchmark policy rate unchanged at 5.25 per cent in its latest monetary policy review. Analysts believe the central bank may continue to hold rates steady as it monitors evolving global risks and domestic inflation trends.
Looking ahead, experts warn that prolonged geopolitical instability could further strain supply chains and keep inflation elevated, particularly if energy prices remain volatile.