India’s wholesale inflation rises to 3.88% in March, highest in over 3 years on fuel, metal costs

India’s wholesale inflation rose to 3.88% in March — the highest in more than three years — breaking a six-month run of subdued readings through December 2025, as higher prices of crude petroleum, natural gas, basic metals, and manufactured food and non-food items pushed up costs, according to commerce ministry data released on Wednesday.

Wholesale price inflation stood at 2.05% in March 2025. Since July last year, wholesale prices had either contracted or grown by less than 1%. The trend began reversing in January, when inflation came in at 1.81% following two consecutive months of deflation in October and November. WPI inflation had risen further to 2.13% in February.

Inflation in primary articles — which include cereals, paddy, wheat, vegetables, milk, eggs, meat and fish, along with minerals and crude oil — stood at 6.36% in March, up from 0.76% in March 2025.

Primary articles carry a weight of 22.62% in the index. Inflation in this segment was 0.21% in December 2025, rising to 2.21% in January 2026 and further to 3.27% in February.

Inflation in manufactured products — the largest component of the index with a weight of 64.23% — stood at 3.39% in March. This was higher than 3.07% recorded a year ago and 2.92% in February 2026.

"WPI inflation nearly doubled to a 38-month high of 3.9% in March 2026 from 2.1% in February 2026, and printed largely in line with expectations. While the uptick was broad-based, the crude petroleum and natural gas, and the fuel and power groups witnessed sizeable hardening in their YoY inflation rates, reflecting the impact of the surge in global energy prices owing to the West Asia crisis. Notably, these two groups together accounted for 150 bps of the 175 bps uptick in the headline print in March 2026 relative to February 2026,” said Rahul Agrawal, senior economist, ICRA Ltd.

Fuel reversal

The fuel and power category, comprising cooking gas, petrol and diesel, had remained in deflation through February at 3.78%, following a 4.01% contraction in January 2026.

However, the segment turned inflationary in March standing at 1.05% as energy prices rose amid the West Asia war. Softer global energy prices and moderate electricity tariffs had kept prices contained until February, but inflationary pressures began building in March 2026.

“The WPI inflation trajectory would be more indicative of the war effects than the CPI as a lot of buffering is done on the latter especially on the fuel side,” said Madan Sabnavis, chief economist, Bank of Baroda.

That said, he added, the rising trend in WPI is on expected lines and would tend to climb in the coming months due to both base effects as well as price increases in different segments.

Retail echo

Alongside the uptick in wholesale prices, India’s retail inflation also firmed up to 3.4% in March, driven by higher food and energy costs, according to data released last week.

While the Reserve Bank of India (RBI) primarily targets retail inflation measured by the consumer price index (CPI) for its monetary policy decisions, WPI inflation serves as an early indicator of cost pressures for businesses. If sustained, these pressures could eventually transmit to retail prices.

RBI outlook

In February, the RBI had said food supply prospects remained favourable, supported by healthy kharif output, adequate buffer stocks of foodgrains, strong rabi sowing and sufficient reservoir levels.

At its first policy meeting since the outbreak of the Iran conflict on April 8, the central bank cautioned that geopolitical uncertainty, energy price volatility and adverse weather events pose upside risks to inflation.

The RBI held the repo rate steady at 5.25% and projected CPI inflation for 2027 at an average of 4.6%. Governor Sanjay Malhotra said inflation is expected to begin at 4% in Q1, rise to 4.4% in Q2, peak at 5.2% in Q3 and moderate to 4.7% in Q4.

The government is working on revising the WPI base year from 2011-12 to 2022-23 to better reflect structural changes in the economy. A committee led by NITI Aayog member Ramesh Chand is advising on the revision.

An updated base year is expected to provide a more accurate measure of inflation and improve real GDP assessment.

The government is also exploring a transition from the WPI — which covers goods but excludes services — to a more comprehensive producer price index (PPI) that incorporates services. This reflects the growing importance of services, which now account for more than half of India’s economic output.