India’s Wholesale Inflation Hits 9.68% Amid Middle East Tensions

India’s wholesale inflation climbed to 9.68% in May under the new series, driven by elevated food and fuel prices amid continuing geopolitical tensions in West Asia. This marks a sharp rise from 8.26% in April under the old series, and exceeds market expectations of 9.05% as forecast by economists.  

Food and Fuel Pressures: Wholesale food inflation stood at 4.49%, while fuel and power prices surged 30.33%. Crude petroleum and natural gas inflation soared 61.51%, reflecting the impact of disrupted global supply chains and higher import costs. State‑run fuel retailers raised prices four times in May, lifting transport costs and adding to inflationary pressures.  

Manufacturing Costs: Factory‑gate prices also rose, with wholesale inflation in manufactured products accelerating to 7.48%. Chemicals (13.4%), textiles (10.22%), machinery, and basic metals (12.3%) all recorded significant increases, underscoring the broad impact of higher energy costs.  

Risks Ahead: Analysts warn that sustained high energy prices could widen India’s current account deficit, weaken the rupee, and complicate the inflation outlook. A below‑normal monsoon could further lift food prices later this year, adding to the challenge.  

Expert View: Shashwat Singh of Bajaj Broking noted, “The surge underscores India’s exposure to external energy price shocks, with global crude markets continuing to be driven by geopolitical tensions.” The trajectory of oil prices will largely determine whether inflationary pressures ease or intensify in the coming months.  

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