India's WPI inflation to stay high through FY27, says ICICI Bank
ICICI Bank said India’s wholesale price inflation (WPI) is likely to stay elevated through FY27, citing a low base, higher food and fuel prices, and uncertainty over global energy. WPI eased to 9.8% y/y in July from 9.9% in June. Fuel and power inflation fell, but primary and non-food inflation rose. CPI is projected to average 4.8% in FY27.
How this was made
The 30-second read
Why it matters
The key trade implication is a higher-for-longer inflation path (WPI and sticky CPI), with crude oil as the main upside risk to inflation.
Market read
Traders may adjust India inflation and rates expectations based on the stated WPI persistence and crude-oil upside risk.
What to watch
Monsoon and sowing improvements could offset energy-driven WPI risks, especially for food components that are already lower than non-food inflation.
Background
ICICI Bank research expects India’s wholesale inflation to stay elevated through FY27 despite a slight July easing.
Market effects
Sticky retail inflation and crude-oil upside risk can pressure India input costs and pricing power across industrials and consumer-facing sectors.
India inflation persistence can influence INR rates expectations and local bond/FX risk premia.
Crude-oil price assumptions (USD 86.8 vs USD 69) link India inflation risk to global energy markets.
Counterpoint
The report’s pass-through assumption may prove too pessimistic if wholesale-to-retail transmission weakens further than expected.
Key entities
- research sourceICICI Bank
Provides the forecast that WPI remains elevated through FY27 and CPI averages 4.8% in FY27.
- macro indicatorsIndia WPI and CPI
WPI eased marginally to 9.8% in July, while CPI is projected to average 4.8% in FY27.
