Metal prices likely to keep upward pressure on WPI in coming months: Union Bank of India

ANI May 15, 2025 171 views

Union Bank of India warns metal prices could keep wholesale inflation elevated despite April’s WPI cooling. Iron, steel, and chemicals drove core inflation even as fuel costs plunged. Global commodity trends post-US-China deal may add pressure. Food prices also remain a wildcard for near-term inflation risks.

"While food prices firm up, metal prices may keep upward pressure on WPI" – Union Bank of India
New Delhi, May 15: Metal prices are likely to keep pushing up the Wholesale Price Index (WPI) in the coming months, according to a report by Union Bank of India.

Key Points

1

Metals like iron and steel fuel WPI inflation despite April dip

2

Core WPI eases but chemicals, machinery show uptick

3

Fuel prices drop sharply on global oil slump

4

US-China trade deal may further lift commodity costs

Despite a drop in WPI in April 2025, metals have shown a sequential pickup, indicating they may continue to influence the inflation trend.

The report said "While food prices are expected on firm up in the next couple of months, metal prices may keep an upward pressure on WPI".

Core WPI, which excludes food and fuel, moderated to 1.40 per cent in April from 1.59 per cent in March. The rise in metal prices, especially in segments like iron and steel, played a key role in this trend.

The report stated that this happened even though global metal indices showed a different movement, possibly due to a time lag in price changes in various sub-sectors.

Other parts of core WPI that saw a month-on-month rise included chemicals and chemical products, fabricated metal products (excluding machinery and equipment), machinery and equipment, and other manufactured goods.

However, some segments like textiles, pharmaceuticals, and paper & paper products recorded a month-on-month decline.

The headline WPI dropped sharply to a thirteen-month low of 0.85 per cent in April 2025 from 2.05 per cent in March. The drop was mainly driven by a fall in the fuel index, which was impacted by a sharp drop in global oil prices due to rising recession concerns.

Fuel WPI remained in negative territory, falling further to -4.35 per cent in April from -1.10 per cent in March.

Looking ahead, the report expects the WPI trend to be influenced by rising food and commodity prices, especially oil and metals, which have shown a pickup after the US-China trade deal.

It said "Going forward, trends in WPI are likely to be led by sequential rise in food prices along with commodity prices (especially oil and metals) which are on sequential pickup post US-China trade deal".

While food inflation in the Consumer Price Index (CPI) is still slowing down, the trend in WPI food inflation has reversed, suggesting price pressures may return in the near term.

Reader Comments

R
Rahul K.
This is concerning for our manufacturing sector. Rising metal prices will make everything from cars to appliances more expensive. Government should consider some temporary import duty reductions to ease the pressure. 🇮🇳
P
Priya M.
At least fuel prices are down! That's some relief for common people like us. But I worry about the food inflation mentioned - roti kapda makaan prices affect us directly. Hope the monsoon is good this year to balance things out.
A
Amit S.
Interesting analysis. Shows how interconnected global markets are - US-China trade deal affecting our WPI! We need to develop stronger domestic metal production capabilities. Make in India should focus more on raw material self-sufficiency.
S
Sunita R.
As a small business owner making steel furniture, this is worrying news. Our margins are already thin and now raw material costs are rising again. Government should provide some relief to MSMEs in the next budget.
V
Vikram J.
The report mentions textiles and pharma seeing declines - that's good for those sectors at least. But overall, seems like inflation is playing seesaw. RBI will have tough decisions ahead on interest rates.
N
Neha P.
While the analysis is thorough, I wish they explained more about why metal prices are rising despite global indices showing different trends. Is it just time lag or are there other factors at play? More transparency would help.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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Tags:
WPI inflation metal prices Union Bank of India wholesale price index steel prices US-China trade
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