The impact of the US-Iran war is feeding into prices, with India’s wholesale price inflation accelerating to 9.87% in June from 9.68% in May. The rise has been driven by a steep increase in the prices of both food and non-food items.It reflects the impact of the West Asia conflict and the effective blockade of the Strait of Hormuz, a key route through which most of India’s crude oil imports arrive, along with the resulting spillover into food prices.The data comes a day after the June Consumer Price Index (CPI) inflation numbers which breached the RBI’s target level of 4% for the first time in several months.Also Read | India’s economy passed the Iran war test. Could El Nino spoil the party?
WPI Data
“Mineral Oils (containing Petroleum Products), Food Articles, Manufacture of Basic Metals, and Manufacture of Chemicals and Chemical Products have been major drivers of WPI inflation in June 2026,” the commerce and industry ministry said while releasing the Wholesale Price Index (WPI) data.The Wholesale Price Index is calculated using 2022-23 as the base year.Data released by the Commerce and Industry Ministry on Tuesday showed that inflation in the fuel and power category eased to 27.41 per cent in June from 30.33 per cent in May.Food articles recorded wholesale inflation of 5.49 per cent during June, up from 3.60 per cent in the previous month. Inflation for non-food articles stood at 11.07 per cent, while minerals registered 9.45 per cent.Inflation in manufactured products remained unchanged at 7.48 per cent, the same level recorded in May.
CPI At 17-Month High
Retail inflation, measured by the Consumer Price Index (CPI), also climbed sharply in June, reaching a 17-month high of 4.38 per cent compared with 3.93 per cent in May.The RBI, which primarily relies on CPI inflation while formulating monetary policy, has been tasked by the government with maintaining headline inflation at 4 per cent, with a tolerance band of 2 percentage points on either side.Last month, the RBI revised its inflation forecast for the current financial year upward to 5.1 per cent from 4.6 per cent, citing rising input costs, largely due to the transmission of higher global energy prices to retail petrol and diesel prices.The increase was driven by faster food inflation and successive fuel price hikes introduced by the government in late May following higher energy costs stemming from the prolonged conflict in West Asia.Also Read | Trump’s ceasefire ‘over’ remarks & fresh Strait of Hormuz disruptions: What it means for India Data released by the National Statistical Office (NSO) on Monday showed that inflation in the food index climbed to 5.3% in June from 4.8% in May. A deficient monsoon also contributed to the rise and is expected to exert additional pressure on food prices in the coming months.The “restaurants and accommodation services” category recorded further acceleration in inflation, reaching 6.9% during June. The category has witnessed a sharp rise in recent months due to higher commercial cooking gas prices, reflecting the increase in food costs across restaurants and eateries.June also marked the first occasion on which retail inflation exceeded 4% under the revised CPI series with 2024 as the base year, introduced in February. The earlier and revised CPI series are not directly comparable because the updated series incorporates new data sources and revised methodologies. The June data fully reflected the impact of multiple increases in retail fuel prices, with inflation in personal transportation costs rising to 7.4%, compared with 3.1% in May.
