WPI rises in March on energy price surge, RBI likely to further hold rates: Economists
India’s wholesale price inflation (WPI) saw a rise in March, driven largely by higher global energy prices amid geopolitical tensions in West Asia, according to economists on Wednesday.
Rahul Agrawal, Senior Economist at ICRA, said that the uptick was broad-based, with crude petroleum and natural gas, along with fuel and power.
"Notably, these two groups together accounted for 150 basis points of the 175 basis points uptick in the headline print in March 2026 relative to February 2026," he said.
Agrawal also noted that food inflation remained steady at 1.8 per cent in March, while core WPI -- non-food manufactured items -- hardened to a 41-month high of 3.7 per cent from 3.3 per cent in February.
On a sequential basis, the core index rose 0.7 per cent in March, in line with the average of the previous three months, he added.
Looking ahead, he said elevated global energy prices, along with higher shipping, freight and input costs, are expected to push up landed import costs and exert upward pressure on wholesale inflation in April.
Assuming an average crude oil price of $85 per barrel for FY27, the ICRA has pegged WPI inflation at around 3.5 per cent for the fiscal, with upside risks including a potentially deficient monsoon linked to El Niño conditions.
Echoing similar concerns, Rajani Sinha, Chief Economist at CareEdge Ratings, said the latest WPI data reflects a stronger impact of the West Asia crisis, with a sharper rise compared to retail inflation.
"This divergence is driven by a sharp increase in bulk diesel and other commercial fuel prices, while retail petrol and diesel prices remained unchanged," she said.
Refineries raised bulk diesel prices by over 25 per cent in March, while domestic gas cylinders saw a Rs 60 increase and commercial cylinders recorded a cumulative hike of Rs 310, she noted.
She added that even with an early resolution of the West Asia crisis, global crude oil prices are likely to average $85–90 per barrel in FY27.
"The burden of higher global crude oil prices will be shared by households, government, and OMCs," she said
Sinha also added that oil marketing companies may be able to absorb crude prices up to $100–105 per barrel due to strong refining margins. She has expected that WPI inflation to average around 5 per cent in FY27, assuming crude oil at $90 per barrel.
On monetary policy front, she said the Reserve Bank of India is likely to maintain status quo on policy rates.
"Given the lingering growth concerns, the RBI will not be in a hurry to reverse the rate cycle," she said.
She further stated that the central bank can explore the possibility of a rate cut towards the end of the fiscal year if the growth outlook deteriorates significantly below the long-term potential growth.
