Wholesale Price Index (WPI) inflation in India reached a new historical high of 9.87% in June, up from 9.68% in May according to the latest data. This increase was driven by sharp rises in food and commodity prices, which outweighed the slowdown in fuel and power inflation, according to information published by the Ministry of Commerce and Industry on Tuesday.
The all-commodity index rose to 110.2 in June compared to 109.9 in May. Furthermore, the government released the Producer Price Index (PPI) for Indian goods, which showed inflation growth of 9.57% in June, up from 9.38% in May, generally aligning with the trend in wholesale inflation.
The rise in June was attributed to commodities and food products, despite a decline in fuel sector inflation. WPI inflation in the fuel and power segment decreased to 27.41% in June from 30.33% in May, and the index for this group fell from 113 to 111.1.
Madan Sabnavis, Chief Economist at Bank of Baroda, noted the significance of the June figure as price pressure has become broader and more generalized. He described it as part of an upward trend that began forming in November, when the index was still in a state of moderate deflation. According to him, 'the days of low inflation are over.'
Commodity sector inflation jumped to 7% in June, up from 4.99% in May, marking the highest level in the last 18 months. Previously, it was only higher in December 2024, when it stood at 7.46%. The index for this segment increased to 116.1 from 113.7. Within this segment, food inflation accelerated to 5.49% from 3.6%, non-food inflation rose to 11.07%, and mineral inflation climbed to 9.45% from 4.91%.
The WPI food index, which combines food from raw materials with processed food items, reached 6.14% in June, up from 4.49% in May, representing a peak in 18 months. It was last higher in December 2024, when it was 7.81%.
The Ministry indicated that the main factors influencing WPI inflation in June were mineral oils, food products, basic metal production, and the production of chemicals and chemical products. Inflation in finished goods production, which accounts for 63.1% weight, remained stable at 7.48%. The group continued to record double-digit growth in basic metals (12.31%), chemicals (12.78%), textiles (10.85%), and electrical equipment (11.03%).
In the fuel and power segment, inflation for crude oil and natural gas sharply dropped to 34.75% in June compared to 61.51% in May, while the index fell from 136.8 to 120.2 in the previous month. Electricity inflation remained negative at -0.76%, which is better than -1.85% last month.
Sabnavis suggested that WPI inflation should have eased following the peace agreement in the Middle East, which lowered crude oil prices to the low seventies, but the resumption of conflict pushed prices back above $80. Since administrative measures are unlikely to cool down fuel prices, he expects WPI inflation to remain in the 9–10% range over the next few months, with key variables being the monsoon harvest and tariffs.
