India Ratings and Research (Ind-Ra) has said that India's wholesale and retail inflation possibly will accelerate to over 12 per cent and 6 per cent, respectively, in October due to an adverse base effect, unfavourable weather conditions and an energy price shock. The adverse base effect is also expected to keep wholesale price pressures elevated at least until February 2027, with Wholesale Price Index (WPI) inflation likely to remain in double digits. However, the agency said inflation could be lower if the crisis in West Asia is resolved.
Ind-Ra further said that the Reserve Bank of India (RBI) could raise policy rates by 50-75 basis points in the current tightening cycle. WPI inflation surged to a series high of 11.39 per cent in September, up from 9.92 per cent in August. Meanwhile, retail inflation rose to a 23-month high of 5.54 per cent in September, compared with 4.83 per cent in the previous month.
Wholesale inflation responds immediately to changes in energy prices, particularly those of petroleum products. In contrast, the impact on retail inflation depends on government interventions, including changes in taxes and duties, as well as adjustments in retail fuel prices. Pump prices have not kept pace with movements in global crude oil and petroleum product prices. A weakening rupee has also contributed to higher inflation.
