ICRA sees wholesale inflation rising to 12% in October, double digits through Q3

Wholesale price inflation is expected to rise further to around 12% in October amid an adverse base effect and persistent global commodity price pressures, rating agency ICRA said on Wednesday.

ICRA expects wholesale price index (WPI)-based inflation to remain in double digits through the third quarter of the current fiscal, as uneven and below-normal monsoon rains cloud the agricultural outlook and keep food prices elevated.

"With uneven and sub-par monsoon rains scarring the agricultural outlook, food inflation prints are expected to remain elevated in the near term. ICRA expects the WPI inflation to remain in double digits through Q3 FY2027," the agency said in a statement.

Food inflation, measured by the WPI Food Index, is projected to increase to 9.5-10% in October from 8.66% in September.

The agency's outlook comes after wholesale inflation surged to a series-high of 11.39% in September from 9.92% in August due to higher fuel prices and rising costs of manufactured goods.

ICRA's estimate for September inflation was 11.3%.

The Commerce and Industry Ministry said mineral oils, food articles, crude petroleum and natural gas, coal and lignite, basic metals, chemicals and chemical products, textiles, rubber and plastic products, and electrical equipment were among the drivers of wholesale inflation in September.

The WPI rose to 112.5 in September from 110.8 in August. The final WPI for July remained unchanged at 110.0, with the annual inflation rate retained at 9.78%, the ministry said.

Wholesale inflation has been rising since the beginning of the current fiscal amid the West Asia conflict and disruptions to shipping through the Strait of Hormuz, which have pushed up global crude oil and fertiliser costs, with spillover effects on food and other commodities.

Meanwhile, retail inflation rose to a 23-month high of 5.54% in September from 4.83% in August, driven by a sharp increase in food prices, according to data released earlier this week.

The Reserve Bank of India's Monetary Policy Committee last week raised the benchmark policy rate by 25 basis points to 5.50%.