India’s Wholesale Price Index (WPI)-linked inflation rose sharply to 3.88 per cent in March from 2.13 per cent in February, marking the highest level in 41 months, according to data released by the Ministry of Commerce and Industry.
The spike was primarily driven by a surge in prices of crude petroleum and natural gas, other manufactured products, non-food articles, basic metals, and food articles.
WPI inflation for the Fuel and Power category increased by 4.13 per cent. Within this segment, prices of mineral oils rose by 8.77 per cent, while electricity prices declined by 5.07 per cent in March.
Prices of manufactured goods increased by 0.88 per cent during the month, while food inflation remained unchanged at 1.85 per cent.
According to recently released data by the Ministry of Statistics and Programme Implementation (MoSPI), retail inflation for March was recorded at 3.40 per cent on a year-on-year (YoY) basis. The corresponding inflation rates for rural and urban areas were 3.63 per cent and 3.11 per cent, respectively.
Food inflation for March stood at 3.87 per cent (provisional), with rural and urban inflation rates at 3.96 per cent and 3.71 per cent, respectively.
S&P Global Ratings has stated that India’s economic growth could slow by up to 80 basis points if crude oil prices average $130 per barrel in 2026.
Higher oil prices could widen the current account deficit, with estimates suggesting that a $10 per barrel increase may expand the gap by about 0.4 percentage points of GDP.
“India isn’t immune to the shocks reverberating from the West Asia conflict. The impact of higher energy prices and supply disruptions may persist for months, affecting economic activity across households, corporations, and banks,” S&P Global Ratings said in a report.
The report assumes Brent crude at $130 per barrel in 2026 and $100 in 2027 under a stress scenario, compared to a base case of $85 and $70, respectively. It does not foresee any immediate impact on India’s sovereign rating, although fiscal consolidation efforts may face temporary setbacks.