India Ratings and Research (Ind-Ra) on Thursday said India’s wholesale and retail inflation could accelerate to over 12 per cent and 6 per cent, respectively, in October due to adverse base effect, weather, and energy price shock.
The adverse base effect would also keep pressure on wholesale prices at least till February 2027 and WPI inflation is expected to remain in double digits, Ind-Ra said.
“Wholesale inflation might jump to over 12 per cent and retail inflation breach 6 per cent in October 2026. However, in case the West Asia crisis resolves, inflation could be lower. The Reserve Bank of India (RBI) could raise policy rates by 50-75 bp in the current tightening cycle,” Ind-Ra Chief Economist Devendra Kumar Pant said.
The wholesale price index-based WPI inflation rose to a series high of 11.39 per cent in September, up from 9.92 per cent in August. Retail inflation rose to a 23-month high of 5.54 per cent in September, up from 4.83 per cent in the previous month.
Wholesale inflation responds to energy prices, especially petroleum product prices immediately, whereas the retail inflation response depends on government intervention (changes in tax and duties) and change in pump prices (which have not kept pace with movement of global crude and petroleum product prices). Weak currency has also acted as a catalyst for higher inflation.
“Both wholesale and retail inflation are getting generalised,” Pant said, adding the Reserve Bank could raise policy rates by 50-75 bps in the current tightening cycle.
Last week, the Reserve Bank’s monetary policy committee hiked benchmark policy rates by 25 bps to 5.50 per cent — it’s first rate hike since February 2023.
