Fuel price controls are why WPI has run ahead of CPI

Economy No. 14 16 September 2026 · 1 min read

India has two inflation numbers right now and they diverge. WPI rose 9.92% in August from a year earlier. CPI rose 4.82%. Wholesale has been the higher one since March, the first time since 2022.

Oil seems to be one of the main reasons. With the Strait of Hormuz shut, Brent went past $120. Wholesale fuel went from falling 4.3% in February to rising 40.7% in April.

But consumers haven't felt it yet. Fuel and power in the shopping basket is up 2.6%, transport 4.6%. It is controlled because the wholesale index is taken before tax, and pump prices are set by the state oil companies.

But holding that also costs money. In March the government cut excise by about ₹10 a litre, petrol to ₹3 and diesel to nothing, to keep the oil companies standing rather than make fuel cheaper. They are still thought to be losing ₹48.8 a litre.

So the cost is partly borne by the companies and partly by the government, rather than by the consumers.

Wholesale prices are rising twice as fast as retail: prices at the factory gate rose 9.9% in the year to August 2026 against 4.8% in the shops, the first stretch above retail since 2022. Monthly, January 2022 to August 2026.

Most of the oil shock stops before the shop: in August 2026 wholesale prices rose 9.9% against retail 4.8% for all items, and 22.9% against 2.6% for fuel and energy.

Sources