WPI inflation rises to 9.92% in August on rising prices of food, fuel, manufactured items

Economy · 15 September 2026 · Based on The Hindu (original report)

Worth reading — 1 past UPSC question on this theme (Prelims GS-1 2020).

2-minute summary

India's Wholesale Price Index (WPI) inflation surged to 9.92% in August 2026, up from 9.78% in July, driven by broad-based price increases across food, fuel, and manufactured goods. Manufactured items hit a series-high inflation rate of 8.37%, while the fuel and power basket recorded a sharp inflation rate of 22.93%. Food index inflation also climbed to 7.05%. According to the Ministry of Commerce and Industry, key drivers included mineral oils, basic metals, and chemical products. This upward trajectory is largely attributed to exogenous supply-side shocks, specifically the West Asia conflict and the blockade of the strategic Strait of Hormuz, which inflated global crude oil and fertilizer costs. Domestically, El Niño conditions and an uneven South-West monsoon have added pressure on food prices. In response, the Reserve Bank of India's Monetary Policy Committee (MPC) maintained the benchmark repo rate at 5.25%, projecting retail inflation at 5% for FY27.

Why it's in the news

India's wholesale inflation (WPI) accelerated to 9.92% in August 2026 due to rising global energy costs caused by geopolitical tensions in West Asia and domestic agricultural pressures from El Niño.

Facts to remember

• India's Wholesale Price Index (WPI) inflation surged to 9.92% in August 2026, up from 9.78% in July.
• The WPI in India is published monthly by the Office of the Economic Adviser within the Ministry of Commerce and Industry.
• The WPI uses 2011-12 as its base year and comprises Manufactured Products, Primary Articles, and Fuel & Power groups.
• Following the Urjit Patel Committee recommendations in 2014, the RBI shifted its primary inflation anchor from WPI to CPI (Combined).

Background and context

The Wholesale Price Index (WPI) measures the average change in the prices of goods sold in the wholesale market. In India, it is published monthly by the Office of the Economic Adviser, Ministry of Commerce and Industry, using 2011-12 as the base year. WPI is divided into three major groups: Manufactured Products (weight: 64.23%), Primary Articles (weight: 22.62%), and Fuel & Power (weight: 13.15%). Unlike the Consumer Price Index (CPI), WPI does not capture the prices of services and places a much higher weight on manufactured goods rather than food items. Following the Urjit Patel Committee recommendations in 2014, the Reserve Bank of India (RBI) shifted its primary inflation anchor from WPI to CPI (Combined) for monetary policy formulation. However, WPI remains a crucial indicator for tracking producer-level price pressures and deflating nominal GDP.

Committees and reports

• Urjit Patel Committee on Monetary Policy Framework — Recommended that the RBI adopt CPI (Combined) instead of WPI as the nominal anchor for monetary policy to better target retail-level inflation.
• Saumitra Chaudhuri Committee — Recommended the revision of the WPI base year to 2011-12 and updated the basket of commodities to reflect modern consumption patterns.

Government schemes

• Price Stabilization Fund (PSF) — Maintained by the Ministry of Consumer Affairs to regulate extreme volatility in the prices of essential agricultural commodities like pulses and onions.

Previous UPSC questions on this theme

• Prelims GS-1 2020 — Consider the following statements : 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct ? (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3

Mains practice: Explain the structural differences between the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) in India. How does a divergence between these two indices complicate monetary policy formulation?

The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) are the two primary measures of inflation in India, but they differ fundamentally in their structure, composition, and policy utility.

• Structural Differences:

1. Publishing Agency: WPI is compiled by the Office of the Economic Adviser (Ministry of Commerce and Industry), whereas CPI is published by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).

2. Base Year: Both indices currently use different base years; WPI uses 2011-12, while CPI uses 2012.

3. Commodity Basket & Weights: WPI only tracks goods, with Manufactured Products holding the highest weight (64.23%), followed by Primary Articles (22.62%) and Fuel & Power (13.15%). Conversely, CPI tracks both goods and services, with Food and Beverages holding the highest weight (~45.86%).

4. Price Level: WPI measures price changes at the first stage of transaction (producer/wholesale level), while CPI measures the price paid by the ultimate consumer at the retail level.

• Complications in Monetary Policy due to Divergence:

When WPI and CPI diverge—such as when WPI rises sharply due to global commodity shocks while CPI remains moderate—it creates a policy dilemma for the RBI's Monetary Policy Committee (MPC).

1. Cost-Push vs. Demand-Pull: High WPI driven by global fuel and metal prices indicates supply-side cost-push inflation. Raising interest rates (repo rate) to curb this is often ineffective because monetary policy primarily targets demand-pull inflation.

2. Policy Lag: A steep rise in WPI eventually passes through to retail consumers (CPI) over time. If the RBI preemptively tightens rates based on WPI, it risks suppressing domestic growth; if it delays, it risks letting retail inflation spiral out of control.

Conclusion:

While the RBI uses CPI as its primary nominal anchor for inflation targeting, monitoring WPI is essential to detect early producer-level price pressures. Effective inflation management requires close coordination between monetary policy and fiscal interventions, such as supply-chain stabilization and strategic import duty adjustments.

Prelims practice questions

Q1. Consider the following statements regarding the Wholesale Price Index (WPI) in India: 1. It is compiled and released monthly by the National Statistical Office (NSO). 2. Services are completely excluded from the WPI basket. 3. Manufactured products carry the highest weightage in the WPI basket. Which of the statements given above are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Answer: B. Statement 1 is incorrect because WPI is compiled and released by the Office of the Economic Adviser, Ministry of Commerce and Industry (not NSO). Statement 2 is correct because WPI only tracks goods, excluding services. Statement 3 is correct because Manufactured Products carry the highest weightage (64.23%) in the WPI basket.

Q2. Which of the following committees recommended that the Reserve Bank of India (RBI) should adopt the Consumer Price Index (Combined) as its primary anchor for monetary policy?

1. Y.H. Malegam Committee
2. Nachiket Mor Committee
3. Urjit Patel Committee
4. Bimal Jalan Committee

Answer: C. The Urjit Patel Committee (2014) recommended that the RBI adopt the CPI (Combined) as the nominal anchor for its monetary policy framework to target retail inflation directly.

Q3. With reference to the components of the Wholesale Price Index (WPI) in India, arrange the following groups in descending order of their weightage: 1. Fuel and Power 2. Primary Articles 3. Manufactured Products Select the correct answer using the code given below:

1. 2 - 3 - 1
2. 1 - 2 - 3
3. 3 - 2 - 1
4. 3 - 1 - 2

Answer: C. The correct descending order of weightage in the WPI basket is: Manufactured Products (64.23%), followed by Primary Articles (22.62%), and Fuel & Power (13.15%). Hence, the order is 3 - 2 - 1.

Revision flashcards

• Who publishes the Wholesale Price Index (WPI) in India? The Office of the Economic Adviser, Ministry of Commerce and Industry.
• What is the current base year for calculating WPI in India (as of September 2026)? 2011-12.
• What are the three main components of WPI and their approximate weights? Manufactured Products (64.23%), Primary Articles (22.62%), and Fuel & Power (13.15%).
• Does WPI capture inflation in the services sector? No, WPI only measures price changes of physical goods; services are excluded.
• Why does a global crude oil price spike impact WPI more directly than CPI? WPI has a higher direct weightage for fuel and power (13.15%) and manufactured inputs, making it highly sensitive to global supply-side commodity shocks.