Wholesale inflation jumps to 9.7% in May 2026 on surging fuel prices

Inflation at the wholesale level rose to 9.7% in May 2026, primarily driven by surging prices of crude oil, natural gas, mineral oils and, to a smaller extent, manufactured products, according to official data.

The Ministry of Commerce and Industry on Monday released the new series of the Wholesale Price Index (WPI) with an updated base year of 2022-23 and a wider ambit of goods measured. Due to the base year update, a historical comparison further back than April 2024 is not available. The May 2026 inflation rate is the highest since at least then.

Along with the new WPI, the Commerce Ministry also released the first editions of its Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI), and Service Producer Price Index (Service PPI) of seven services — Banking, Securities Transaction, Insurance, Management of Pension Funds, Railways, Passenger Air, and Telecom.

WPI to be phased out

The government also said that the Producer Price Index (PPI) will replace the WPI in five years.

“Considering the wide usage of WPI in price escalation clauses, this index will be released for five years from the date of its release, along with PPI, and will be discontinued thereafter,” the Commerce Ministry said in its release. “This would give sufficient time to users to switch from WPI to PPI,” the release said.

It added that the transition from WPI to PPI is in line with the global best practices adopted by advanced economies and the recommendations of the International Monetary Fund (IMF).

“Availability of both the Output PPI and Input PPI gives a better understanding of the price movements of output produced vis-a-vis inputs being used in an industry,” the statement added. “It also explains how inflation experienced by producers on inputs is passed on to the output being produced,” it said.

Fuel inflation soars

The surge in the WPI in May 2026 was driven overwhelmingly by soaring fuel prices that month as a result of the West Asia crisis.

Inflation in the crude oil and natural gas category jumped to 61.5% in May 2026, from 56.3% in the previous month. While this is a reflection of the elevated global oil and gas prices, it is also a result of a low base, since the new series of the WPI shows prices in this category contracted by 15.5% in May last year.

Similarly, inflation in the mineral oils category accelerated to 49.8% in May 2026 from 40.7% in April. Here, too, prices had contracted in May last year.

“The recent cooling in global energy and commodity prices after the easing of tensions in West Asia is expected to provide respite to the WPI inflation print for June 2026,” Rahul Agrawal, Principal Economist at ICRA Ltd., said.

Other inflation also rises

The WPI shows that inflation in the manufacturing and food segments also quickened in May 2026, albeit not as quickly as for fuel.

Inflation in the manufactured products category rose to 7.5% in May 2026, from 6.7% in the previous month and 1.4% in May last year. Within this, the manufacture of five categories — tobacco products, textiles, chemicals, basic metals and electrical equipment — saw inflation above 10% in May 2026.

According to Madan Sabnavis, chief economist at the Bank of Baroda, this is of particular significance since not all of it is linked to global energy prices.

“This is significant because it has embedded higher costs which are not necessarily linked to crude oil,” Mr. Sabnavis noted. “Besides, once prices increase for some of these products, such as leather, apparel, rubber products etc, they may not come down when crude oil price moderates in the world market.”

Inflation in the food category rose to 3.6% in May 2026 from 2.4% in the previous month and a contraction in prices of 2.6% in May 2025.