Wholesale inflation rose to 11.39% in September from 9.92% in August, driven by a 57.32% year-on-year surge in crude petroleum and natural gas prices. The increase was the sharpest under the current Wholesale Price Index (WPI) series, with 2022-23 as the base year.
Fuel and power inflation climbed to 25.85%, while manufactured product inflation reached 9.76%, according to data released by the Commerce and Industry Ministry. The rise in wholesale prices contrasts with a 0.43% fall in wholesale electricity prices.
Mineral oil prices rose 40.02% year-on-year, while coal and lignite prices increased 9.31%. Among manufactured products, basic metals recorded inflation of 16.96%, chemicals and chemical products 16.74%, textiles 13.85%, and rubber and plastic products 13.47%. Retail inflation rose to 5.54% in September from 4.83% in August, well below the wholesale rate.
Electricity prices followed a different trend. Wholesale electricity prices fell 0.43% year-on-year in September, compared with a 1.73% decline in August, even as the broader fuel and power index rose 25.85%. The divergence reflects different movements across energy components and does not necessarily mean that electricity distribution companies faced lower procurement costs.
The impact is likely to vary across states and industries, but national inflation data do not establish where the burden is greatest. Electricity distribution companies differ in procurement costs, financial positions and tariff arrangements.
Some may be more exposed to coal prices or short-term power markets, while others may be protected by existing contracts. Regulatory orders can allow eligible fuel and power purchase costs to be recovered through consumer-bill adjustments.
The amount and timing of recovery vary by state. Business Standard also identified higher fuel, food and manufactured-product prices among the drivers of September inflation, but national figures do not show which state utilities faced the largest increase in procurement costs or how much they passed on to consumers.
Establishing the distribution of the shock requires comparing state electricity regulators’ tariff orders, fuel and power purchase adjustment charges, subsidies and distribution-company accounts.
Industrial exposure can be assessed using sectoral energy-use data, input costs and industry input-output tables, alongside the WPI’s item-level indices published by the Office of the Economic Adviser. These comparisons could identify industries and utilities most exposed to higher energy prices. They would not, on their own, measure actual losses, which also depend on contracts, inventories, output prices and profit margins.
The key question is how much of the September price shock has been absorbed by suppliers and businesses, and how much is likely to reach consumers through higher prices and electricity bills.