Winning Bizness Desk

Mumbai.Wholesale inflation in India rose to a 12-month high of 2.13% in February, reflecting a fresh increase in the prices of food items and daily essentials. The data released by the Commerce Ministry on March 16 showed a steady rise in the Wholesale Price Index (WPI) compared with recent months. In January 2026, wholesale inflation stood at 1.81%, while in December it was much lower at 0.83%. The latest numbers indicate that the price pressures at the wholesale level are gradually building up again.

Rise driven by costlier food and essentials

Inflation in items of daily use saw a notable rise during February. Prices of primary articles and food products, which form a major part of wholesale inflation, recorded a sharp increase compared with the previous month. Experts say the jump reflects supply pressures and rising costs in agricultural and related products.

Key changes in wholesale inflation segments include:

• Inflation in primary articles rose from 2.21% to 3.27%.
• Food index inflation moved sharply from minus 1.41% to 1.85%.
• Fuel and power inflation improved slightly from minus 4.01% to minus 3.78%.
• Manufacturing products inflation rose marginally from 2.86% to 2.92%.

These figures suggest that food prices and basic commodities played a key role in pushing overall wholesale inflation higher.

Structure and weightage of wholesale inflation components

The Wholesale Price Index is divided into three main components, each carrying a different weight in the overall calculation. Manufactured products have the highest weightage in WPI, followed by primary articles and fuel and power. Primary articles themselves include several categories that influence inflation trends.

Important components of primary articles include:

• Food articles such as cereals, wheat and vegetables
• Non-food articles such as oilseeds
• Minerals
• Crude petroleum

The weight distribution in WPI is as follows:

• Manufactured products: 64.23%
• Primary articles: 22.62%
• Fuel and power: 13.15%

Because manufactured goods carry the largest weight, changes in factory-related products like metals, chemicals, plastics and rubber often have a significant impact on overall wholesale inflation.

Retail inflation also records increase in February

Retail inflation also moved up during February, reflecting a broader rise in prices faced by consumers. According to recent data, retail inflation increased to 3.21% in February from 2.74% in January. The rise has come at a time when geopolitical tensions involving Israel, the United States and Iran have created uncertainty in global energy markets.

Economists warn that if the conflict continues for a long period, crude oil prices could surge sharply. In such a scenario, crude oil could climb to as high as 150 dollars per barrel, which may directly affect domestic fuel prices.

Possible impact of global tensions on inflation

A sustained rise in crude oil prices can push up petrol and diesel prices in India. Higher fuel prices typically increase transportation costs across sectors, which then gets reflected in the prices of essential commodities.

Possible consequences include:

• Higher freight costs for transporting goods
• Increase in prices of fruits and vegetables
• Rising costs of essential consumer goods
• Additional pressure on overall inflation levels

Such developments can eventually affect household budgets as producers pass on higher input costs to consumers.

How inflation is measured in India

Inflation in India is measured mainly through two indicators: retail inflation and wholesale inflation. Retail inflation is based on the prices paid by consumers and is measured through the Consumer Price Index (CPI). Wholesale inflation, on the other hand, is based on prices charged by businesses in wholesale markets and is measured through the Wholesale Price Index (WPI).

In WPI calculations, manufactured products account for about 63.75% of the index, while primary articles such as food have a weight of 22.62% and fuel and power account for 13.15%. In retail inflation, food and related products have a much larger share of 45.86%, while housing contributes around 10.07%, along with fuel and other items.

If wholesale inflation remains high for a prolonged period, producers often transfer the additional cost burden to consumers. The government can attempt to control the situation mainly through tax measures. For example, in the past it reduced excise duty on fuel when crude oil prices surged, although such tax cuts can only be done within certain limits.