India's wholesale price inflation accelerated to 9.87 percent in June from 9.68 percent in May, reflecting persistent price pressures across food articles, mineral oils, basic metals and chemicals. The latest data, released by the Ministry of Commerce and Industry on Tuesday, comes a day after retail inflation also edged higher, indicating that inflationary pressures are widening across the economy.
The Wholesale Price Index (WPI) for all commodities rose to 110.2 in June from 109.9 in May. On a year-on-year basis, wholesale inflation climbed to 9.87 percent, extending the sharp rise seen in recent months.
Retail inflation, measured by the Consumer Price Index (CPI), increased to 4.38 percent in June from 3.93 percent in May.
Food inflation under the Consumer Food Price Index (CFPI) also accelerated to 5.32 percent from 4.78 percent, suggesting that food prices remain a major source of inflationary pressure.
Inflation in primary articles rose to 7.0 percent in June from 4.99 percent in May, with the index increasing to 116.1 from 113.7.
Key highlights:
Food articles inflation rose to 5.49 percent from 3.6 percent.
Non-food articles inflation increased to 11.07 percent from 9.49 percent.
Fuel and power inflation remained high at 27.41 percent, though lower than 30.33 percent in May.
Mineral oils inflation eased to 46.48 percent from 49.82 percent.
Crude petroleum and natural gas inflation moderated to 34.75 percent from 61.51 percent.
Electricity remained in deflation at 0.76 percent.
Inflation in manufactured products remained unchanged at 7.48 percent, with the index steady at 107.8.
Major segments recorded the following:
Manufactured food products: 7.2 percent (6.14 percent in May)
Textiles: 10.85 percent (10.22 percent)
Basic metals: 12.31 percent
Chemicals and chemical products: 12.78 percent (13.4 percent in May)
The WPI Food Index, which combines food articles and manufactured food products, climbed to 6.14 percent from 4.49 percent in May.
According to the ministry, higher prices of mineral oils, food articles, basic metals, and chemicals and chemical products were the main contributors to June's increase in wholesale inflation.
A sustained increase in wholesale inflation raises input costs for manufacturers and producers. While companies may absorb part of the increase initially, prolonged cost pressures are usually passed on to consumers, potentially pushing up retail inflation in the coming months.
The trend could lead to higher prices for packaged foods, consumer goods, automobiles, construction materials and other manufactured products. It may also put pressure on corporate profit margins, especially in sectors where companies have limited ability to raise selling prices.
Higher wholesale inflation could complicate the Reserve Bank of India's policy outlook if retail inflation also remains elevated. Although the RBI primarily targets CPI inflation, persistent increases in wholesale prices often feed into consumer prices with a lag, reducing the scope for aggressive interest rate cuts.
Businesses could also delay expansion plans if raw material and energy costs remain high, while sectors dependent on commodities, including manufacturing, infrastructure and engineering, may face increased cost pressures.
The government revised the final WPI index for April to 108.9 from the provisional estimate of 108.8. Consequently, April's wholesale inflation was revised upward to 8.36 percent from 8.26 percent.
The provisional estimate for June was compiled with a weighted response rate of 82.6 percent, while the final April estimate was based on a response rate of 97.5 percent.
The government also released provisional Output Producer Price Index (PPI) data. The all-India Output PPI stood at 109.9 in June, up from 109.6 in May, while the trial Input PPI for the manufacturing sector stood at 107.1.