WPI Inflation Eases Marginally to 9.78% in July; Global Risks Loom, Say Economists

Global energy, weather risks threaten further easing in wholesale inflation: Economists

New Delhi, August 14

The Wholesale Price Index (WPI) inflation rate stood at 9.78 per cent in July 2026, down marginally from 9.87 per cent in June 2026. The decline was mainly driven by a sharp moderation in fuel and power inflation, which fell to 20.05 per cent in July from 27.41 per cent in June.

However, economists said the overall inflation picture remains a concern as manufacturing costs continue to remain high and risks from global energy markets and domestic weather conditions could put further pressure on prices.

Rajani Sinha, Chief Economist, CareEdge Ratings, said WPI inflation moderated marginally to 9.8 per cent in July from 9.9 per cent in June, with the decline largely supported by lower prices of mineral oils and crude petroleum and natural gas.

"There was a sharp decline in fuel and power inflation, but it remains high at 20 per cent. The moderation was driven by lower prices of mineral oils and crude petroleum & natural gas, reflecting the sequential softening in global energy prices in the month of July. However, the global geopolitical scenario remains volatile, and the future trajectory of fuel and power inflation will continue to hinge on global energy market dynamics," Sinha said.

Manufacturing prices are also keeping pressure on wholesale inflation. The WPI inflation rate for manufacturing stood at 8.29 per cent in July.

Within the sector, inflation in the manufacture of chemicals and chemical products was 13.12 per cent, while manufacturing of basic metals recorded inflation of 12.56 per cent and electrical equipment 12.34 per cent.

Prachi Kele, Lead Economist, PL Capital, said wholesale inflation remains high despite the marginal easing.

"While WPI does not translate directly into retail inflation, sustained energy and input-cost pressures could gradually feed through to consumer prices if they persist," Kele said.

PHDCCI also said the immediate outlook remains one of elevated but potentially moderating wholesale inflation. It identified renewed increases in global crude and commodity prices, continued metal and chemical price pressures, and weather-related food supply disruptions as key risks.

Ranjeet Mehta, CEO & Secretary General, PHDCCI, said, "The immediate outlook is one of elevated but potentially moderating wholesale inflation. The key risks are renewed increases in global crude and commodity prices, persistence of metal and chemical price pressures, and weather-related food supply disruptions. Conversely, easing energy costs, improved domestic supply conditions, and moderation in input prices could support a gradual decline in WPI inflation."

ICRA Principal Economist Rahul Agrawal expects a larger easing in WPI inflation to below 9.5 per cent in August 2026, after inflation peaked at 9.9 per cent in May-June 2026. However, he expects inflation to remain elevated through much of the year, with an average WPI inflation forecast of around 8.5 per cent for FY2027.

He said, "Nevertheless, prints are likely to remain elevated through much of the year, with an average WPI inflation forecast of around 8.5 per cent for FY2027, feeding into a high nominal GDP growth figure as well".

— ANI