India's Wholesale Inflation Surges to 2.13% in February, Highest in Nearly a Year
Official data released on Monday revealed that wholesale price inflation in India accelerated to 2.13 per cent in February, marking the highest level in 11 months. This increase comes as firming prices of food and non-food articles kept cost pressures elevated, despite some moderation in vegetable inflation. The WPI-based inflation rate has now risen for the fourth consecutive month, up from 1.81 per cent in January and compared to 2.45 per cent in February last year.
Food and Non-Food Articles Drive Inflationary Pressures
Inflation in food articles increased to 2.19 per cent in February from 1.55 per cent a month earlier. While vegetable inflation moderated to 4.73 per cent from 6.78 per cent, prices of pulses, potato, egg, meat, and fish registered higher inflation during the period. The industry ministry stated in a release that the positive rate of inflation in February 2026 is primarily due to increases in prices of other manufacturing, manufacture of basic metals, non-food articles, food articles, and textiles.
Deflation in the fuel and power category narrowed to 3.78 per cent in February from 4.01 per cent in January. Global crude prices averaged USD 68 per barrel during the month, up from USD 63 per barrel in January. Economists caution that wholesale inflation could gather further momentum if crude oil prices remain elevated, potentially spilling over to sectors such as fertilisers and aluminium, given that WPI is more closely aligned with international price trends than the retail inflation basket.
Impact of Middle East Conflicts and Geopolitical Tensions
Barclays highlighted in a research note that the pass-through of higher crude prices due to the Middle East conflict would be more visible in wholesale inflation. The note, quoted by PTI, stated, "With a sharp jump in crude oil prices crossing USD 100/bbl as of 16 March, the corresponding WPI will likely reflect this in the March print." India Ratings and Research also warned that rising crude prices since the US-Iran war could push wholesale inflation higher from March until supply-side pressures ease. The average price of the Indian crude basket for March 2026 (up to March 12) has touched a 44-month high of USD 101.25 per barrel.
Ind-Ra Chief Economist Devendra Pant noted that wholesale inflation may remain elevated amid geopolitical tensions and a favourable base effect. He explained, "The retail prices of petroleum products might remain the same for some time, which may negate any sharp jump in retail inflation. However, the increase in crude oil prices will push wholesale inflation higher. Ind-Ra expects wholesale inflation in March to jump to 3.7 per cent."
Sectoral Breakdown and Policy Implications
According to WPI data, inflation in manufactured products rose marginally to 2.92 per cent in February from 2.86 per cent in January, while non-food articles inflation surged to 8.80 per cent from 7.58 per cent. PHDCCI President Rajeev Juneja emphasized that continued policy attention to supply-chain efficiency, logistics cost reduction, and domestic manufacturing support would be crucial to contain cost-push pressures amid global uncertainty.
Separate data released earlier showed retail inflation rose to 3.2 per cent in February from 2.75 per cent in January. The Reserve Bank of India, which primarily tracks retail inflation while setting policy rates, has reduced benchmark interest rates by 1.25 percentage points in the current fiscal year as price pressures remained contained.
