Metal Prices on the Rise: A Threat to Wholesale Inflation

According to a recent report by Union Bank of India, metal prices are expected to significantly impact wholesale inflation in the upcoming months. Despite the Wholesale Price Index (WPI) reaching a 13-month low of 0.85% in April 2025, metals have consistently shown a month-on-month increase, hinting at a possible resurgence in price pressures.

Core WPI and the Role of Metals

The report highlights that the core WPI, which excludes food and fuel, decreased to 1.40% in April from 1.59% in March. However, the increase in metal prices, particularly iron and steel, has played a crucial role in mitigating the overall decline.

Global Trends vs. Domestic Pressures

Interestingly, this domestic increase in metal prices occurs against the backdrop of a softer trend in global metal indices. The report suggests a delay in how price adjustments permeate through different economic sectors as a possible explanation.

Sectoral Performance Within Core WPI

Several sectors within the core WPI basket experienced month-on-month price increases, including chemicals, fabricated metal goods, and machinery. Conversely, sectors like textiles and pharmaceuticals saw price decreases.

Fuel Prices and Their Impact

The decline in overall WPI was largely attributed to a significant drop in fuel prices, with the fuel index falling to -4.35% in April from -1.10% in March, driven by global oil price slumps and recession fears.

Looking Ahead: Inflation Trends

The report anticipates that wholesale inflation will remain sensitive to fluctuations in food and commodity prices, especially metals and oil, which have begun to rise again following the recent US-China trade agreement.

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