Driven by escalating costs for fuel and power, India’s wholesale inflation climbed to a three-month peak of 3.9 per cent in March, according to data released by the Ministry of Commerce and Industry on Wednesday.
The Wholesale Price Index (WPI) data reflect a tightening squeeze on energy inputs, a trend that market analysts warn may not have peaked yet. Economists expect the upward trajectory to persist in the near term, potentially spilling over into retail inflation (CPI) as manufacturers and transporters pass higher operational costs on to consumers in the coming months.
“Positive rate of inflation in March is primarily due to increase in prices of crude petroleum and natural gas, other manufacturing, non-food articles, manufacture of basic metals and food articles, etc.,” the Ministry said in a statement. Further, data showed that WPI-based inflation rose for the fifth straight month in March as core inflation accelerated, amid softening of primary food items.
Fuel & Power
According to the data, inflation in the fuel and power basket spiked to 1.05 per cent in March, from a deflation of 3.78 per cent in February. Inflation in crude petroleum surged to 51.57 per cent during March, against a deflation of 1.29 per cent in the previous month. Manufactured products inflation rose to 3.39 per cent in March, from 2.92 per cent in February.
“WPI inflation is a cleaner reflection of global commodity prices and captures the ongoing energy price shock better than CPI,” Aastha Gudwani, India Chief Economist at Barclays said. Of the 174 bps increase in headline WPI inflation, 93 bps was driven by crude petroleum and natural gas, followed by a 63-bps increase led by fuel and power WPI. “As global energy prices stay elevated and eventually trickle to other commodity prices, we expect WPI inflation to rise further going ahead,” she said.
According to Rajni Sinha, Chief Economist with CareEdge, the latest WPI data reflect a stronger impact of the West Asia crisis, rising by 1.7 percentage points compared to a modest 0.2 percentage points increase in retail inflation compared to February prints. This divergence is driven by a sharp increase in the bulk diesel and other commercial fuel prices, while retail petrol and diesel prices remained unchanged. Refineries raised bulk diesel prices by over 25 per cent in March amid the crisis.
“Domestic gas cylinders saw a ₹60 increase, whereas commercial cylinders recorded a much steeper cumulative hike of ₹310. The sharp uptick in WPI heightens the risk of second-round effects gradually feeding into retail prices,” she said.
Taking it forward, a note by HDFC Bank anticipates that producers may pass-on atleast part of these cost increases to consumers over the coming months (usually pass-through between WPI and CPI plays out with a lag) even if the current West Asia conflict is short-lived. “The extent of the pass-through would be determined by producers’ pricing power determined by the durability of demand and growth momentum ahead,” it said.
Published on April 15, 2026