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Below the Commentary on September WPI Inflation by Payal V Pandya, Vice President, Bajaj Broking Prive

 India’s WPI inflation at 11.39% in September 2026, up 147 basis points MoM, came in marginally above our expectations, but it is not entirely surprising given the prevailing global and domestic inflationary pressures. We believe inflation will continue to be driven by two key factors: elevated crude oil prices, which remain above the US$100 per barrel mark, and the lingering impact of El Niño-induced weather disruptions that have affected agricultural output across several regions of the country.

These factors are likely to exert pressure not only on prices but also on demand over the coming months. In our view, inflation is expected to remain a concern for at least the next one to two quarters, with meaningful relief likely to emerge only after a sustained moderation in price pressures.

Should geopolitical tensions in the Middle East escalate further or remain prolonged resulting in a renewed surge in energy prices, along with the looming threat of severe El Nino effects domestically as well as globally, WPI inflation could potentially move into the mid-teens by the end of the current fiscal year.

While the RBI is expected to continue deploying appropriate policy measures to contain inflationary risks, many of the current drivers are external in nature and therefore less responsive to domestic policy actions. With CPI inflation already closer to RBI’s upper limit of tolerance (usually +/-200bps from a base of 4% and now at 5.50%), if that is breached in upcoming data, a rate hike in December 2026 MPC meeting would be inevitable.

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