India’s wholesale price inflation accelerated to 1.81% in January — its fastest pace in 10 months — overshooting expectations as manufacturing costs and vegetable prices rebounded.
India’s wholesale price index (WPI) rose 1.81% year-on-year in January, according to data released by the Ministry of Commerce and Industry. The figure exceeded a Reuters poll forecast of 1.25% and marked a sharp pickup from December’s 0.83% increase. Wholesale inflation was last higher in March 2025, at 2.25%.
The January print reflects a broadening of price pressures across manufactured goods and food items, even as fuel costs continued to decline.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
Manufactured product prices — which account for roughly two-thirds of the WPI basket — rose 2.86% year-on-year in January, up from 1.82% in December. Higher prices of basic metals, textiles, and processed food products led to the acceleration.
A global rally in metal prices has pushed up input costs for Indian manufacturers. Higher global prices for steel, aluminum, and other industrial metals typically feed into construction, capital goods, automobiles, and infrastructure-related industries.
Madan Sabnavis, chief economist at Bank of Baroda, attributed part of the rise to global economic and political conditions that have lifted commodity prices. If sustained, such pressures could narrow corporate margins or prompt further pass-through to downstream sectors.
The uptick in manufacturing inflation also suggests firm domestic demand conditions, as producers may find it easier to pass on cost increases when demand is resilient.
Food Inflation Rebounds on Vegetables
Wholesale food prices rose 1.41% year-on-year in January after remaining flat in December.
Vegetable prices climbed 6.78% year-on-year, reversing a 3.5% contraction the previous month. The swing pinpoints the seasonal volatility that characterizes India’s agricultural supply chain. Weather variations, transportation constraints, and supply adjustments can produce sharp month-to-month fluctuations.
The rebound in vegetable prices was a key driver of the overall WPI acceleration. However, broader food inflation remained relatively contained, indicating that the increase was concentrated rather than widespread across the food basket.
Persistent food inflation at the wholesale level can eventually feed into retail prices, though the transmission is neither immediate nor uniform.
Fuel Prices Provide Partial Relief
Fuel and power prices declined 4.01% year-on-year in January, deepening from a 2.31% fall in December. Lower energy costs helped moderate the headline figure and offset part of the pressure from metals and food.
Energy prices have historically played a stabilizing role in India’s inflation cycle when global crude oil markets soften. If fuel deflation persists, it may cushion future wholesale price increases.
However, energy remains sensitive to geopolitical developments and global supply dynamics. Any reversal in crude or coal prices could quickly alter the inflation trajectory.
Implications for Monetary Policy
Wholesale inflation does not directly determine policy decisions by the Reserve Bank of India, which targets consumer price inflation. Nonetheless, WPI is closely monitored as an indicator of pipeline pressures.
An acceleration in wholesale inflation can signal cost-push dynamics that may eventually filter into retail prices, particularly in manufactured goods.
Economists said the January increase is unlikely to alter the immediate policy stance, especially if consumer inflation remains within tolerance levels. Sabnavis noted that the higher wholesale print would not influence monetary policy decisions at this stage.
The latest data suggest that India’s price structure is shifting:
• Industrial input costs are rising, linked to global commodity movements.
• Food prices are showing renewed volatility.
• Energy costs are acting as a buffer.
This configuration indicates moderate cost-push inflation rather than demand-led overheating.
Analysts expect wholesale inflation to stay above 1% in the near term if global metal prices remain elevated and domestic manufacturing activity strengthens further. However, sustained increases would likely require either a broader food price surge or a reversal in fuel deflation.
However, rising input costs may affect pricing strategies and profitability for businesses. For policymakers, the key question is whether wholesale pressures translate into consumer inflation and wage adjustments.
Overall, January’s data signal that upstream price pressures are building again, though not yet at levels that suggest macroeconomic instability.