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Indias wholesale price inflation is projected to cross the 10 per cent mark in September and remain in double digits in the near term, as rising food and energy prices, rupee weakness and weather-related risks continue to put pressure on prices, according to a Union Bank of India (UBI) research report.
The Wholesale Price Index (WPI) inflation is estimated to rise to 10.60 per cent year-on-year in September from 9.92 per cent in August and minus 0.20 per cent in September last year. The report attributed the expected increase to higher vegetable prices, rising manufacturing costs and a low base in food and fuel prices last year. WPI is likely to remain in double digits over the near term, the report said, adding that its forecast for wholesale inflation in FY27 continues to be around 10 per cent. Food WPI is projected to rise to 7.90 per cent in September from 7.05 per cent in August, with vegetable prices expected to increase 15.18 per cent year-on-year. The report estimated that vegetable prices rose 8.50 per cent month-on-month during September, while inflation in spices and other manufactured food products also remained in double digits. The report flagged the possibility of further pressure on food prices from the occurrence of a Super El Nio and sluggish sowing of kharif crops. With the festive season approaching, these factors could pose additional risks to the food inflation outlook. Fuel WPI is estimated to increase to 24.45 per cent in September from 22.96 per cent in August, driven by a renewed rise in crude oil prices. Inflation in crude petroleum and natural gas is projected to climb to 52.93 per cent from 34.41 per cent a month earlier. Core WPI inflation, which excludes food and fuel, is expected to rise to 9 per cent from 8.56 per cent in August. The report said core inflation remained the largest contributor to headline wholesale inflation, with an estimated contribution of 543 basis points in September. UBI cautioned that persistently high wholesale inflation could eventually feed into retail prices as businesses pass on higher input costs. Persistence of elevated WPI increases the possibility of transmission to retail prices, the report said, identifying unseasonal winter rains and an escalation in geopolitical conflicts as additional upside risks to its projections. (ANI)
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