India’s WPI inflation hits 9.92% as CPI rises to 4.82%; will RBI hike rates?
&imwidth=600&imheight=450&format=webp&quality=medium "India’s WPI inflation hits 9.92% as CPI rises to 4.82%; will RBI hike rates?")
Labourers work at a wholesale grain market in Amritsar on September 7, 2026. Photograph: (AFP)
India’s WPI inflation rose to 9.92% in August while CPI inflation climbed to 4.82%, raising questions over whether the RBI could hike interest rates.
India's Wholesale Price Index-based inflation for August has risen to 9.92 per cent from 9.78 per cent in July, while Consumer Price Index- based inflation has raised to 4.82 per cent in August from 4.45 per cent in July, according to the data released by the Ministry of Statistics and Programme Implementation (MoSPI). The Wholesale price-based (WPI) inflation remained above 9 per cent for fourth consecutive month. While the CPI-based inflation remain above the 4 per cent target of the Reserve Bank of India for the third straight month.
What is driving the prices high?
The Fuel and Food category in WPI is by far the highest in August, jumped by 22.9 per cent last month from 20 per cent in July. Among the Fuel and Food basket, mineral oils / petroleum products climbed sharply by 38.48 per cent and crude petroleum and natural gas by 34.41 per cent. While the top five items in the CPI- based inflation are Silver Jewellery 107.11 per cent, ginger 73.82 per cent, onion 48.27 per cent, garlic 43.60 per cent, and gold/diamond/ platinum jewellery at 35.53 per cent.
Will the RBI raise interest rates?
Before these numbers came out, the market widely expected the Reserve Bank of India (RBI) to remain on a comfortable "hold" pattern. The RBI had left the rate unchanged at 5.25 per cent last month. But reports suggest that, at the MPC meeting, some members, including the the governor Sanjay Malhotra, favoured a rate hike if the inflation spread across segments. Now, with Brent Crude futures pushing $108 per barrel internationally, and both WPI and CPI soaring higher makes a case for an interest rate hike. SBI Research stated that they now strongly advocate for a 25-bps rate hike in October, and another 25-bps in December. India's Bond market is also signalling the same; the benchmark 10-year government bond yield recently breached 7 per cent mark, suggesting institutional investors are anticipating a rate hike in the coming months.
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