India’s WPI Inflation Hits 3.5-Year High; RBI Warns Fuel Price Hike May Be Inevitable

India’s wholesale inflation unexpectedly surged to 8.3% in April, the highest level in three-and-a-half years, driven by soaring fuel costs. Global crude oil prices have remained extremely volatile, with benchmark Brent crude breaching the key level of $125 per barrel amid no signs of de-escalation in the Iran-US war.

The rise in India’s wholesale inflation comes despite government intervention to keep retail prices of petrol, diesel, and domestic cooking gas unchanged even as global prices surged.

The government’s prompt intervention helped cushion households and consumers from the immediate shock.

As per a Reuters poll, analysts had expected wholesale inflation to rise to 4.4% from 3.88% in March.

“Positive rate of inflation in April 2026 is primarily due to an increase in prices of mineral oils, crude petroleum and natural gas, basic metals, other manufacturing products, and non-food articles,” the Ministry of Commerce and Industry said in a statement.

Manufactured products inflation rose to 4.62% in April from 3.39% a month earlier, while inflation in metals rose to 7%.

Inflation in chemicals and chemical products increased to 5.09%. Primary articles inflation climbed to 9.17% from 6.36% in March, driven by a spike in crude petroleum, oilseeds, and minerals.

Crude and Fuel Heat Up

Fuel and power inflation surged to 24.71% in April from 1.05% in March. Within the fuel and power basket, price pressures witnessed a sharp upward movement across key energy products in April, driven by the West Asia war.

Inflation in liquefied petroleum gas (LPG) soared to 10.92% from a contraction of 1.54% in March. Petrol inflation surged to 32.40% from 2.50% in the previous month. High-speed diesel inflation jumped to 25.19% from 3.26% in March.

“Going forward, movements in global energy prices, commodity markets, and supply chain conditions will remain important determinants of wholesale price trends. The evolving trajectory of fuel costs and transmission into manufacturing and transport sectors will continue to be monitored closely in the coming months,” Dr Ranjeet Mehta, secretary general and chief executive officer at PHDCCI, said.

Food Inflation Remains Soft

Despite the spike in fuel and energy prices, food inflation remained relatively stable amid a slight increase in vegetable and fruit prices. The WPI food index rose 2.31% year-on-year in April compared with 1.85% in March.

Vegetable inflation stood at 0.53%, while pulses inflation remained in negative territory at -4.03%. However, prices of fruits, eggs, meat, and fish continued to rise.

RBI Warns of Fuel Price Hike

Reserve Bank of India Governor Sanjay Malhotra on Tuesday said the Centre may need to increase retail fuel prices if the war in West Asia prolongs, according to a Bloomberg report.

His remarks came days after Prime Minister Narendra Modi urged citizens to cut down on petrol and diesel usage and limit international travel and gold purchases, citing stress on India’s foreign exchange reserves and pressure on the rupee.

“If this is to continue for a longer period of time, it is just a matter of time before the government will pass on some of the price increases,” Malhotra said at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland.

As per the latest RBI estimates, India’s inflation is expected to average 4.4% in FY27, slightly above the central bank’s inflation target of 4%. The RBI maintains a tolerance band of +/- 2%. The RBI’s Monetary Policy Committee is next scheduled to meet from June 3–5.