Daijiworld Media Network - New Delhi

New Delhi, May 15: A recent report by Union Bank of India has cautioned that metal prices—particularly iron and steel—may exert upward pressure on wholesale inflation in the coming months, even as the Wholesale Price Index (WPI) dropped to a 13-month low of 0.85% in April 2025.

Despite this moderation, the report highlights a steady month-on-month increase in metal prices, suggesting that the cooling in wholesale inflation may be short-lived. Core WPI, which excludes volatile food and fuel components, eased to 1.40% in April, down from 1.59% in March. However, rising metal costs helped cushion the overall decline.

“Food prices are likely to firm up in the coming months, and metal prices could maintain upward pressure on the WPI,” the report noted, as quoted.

Interestingly, the domestic rise in metal prices has come at a time when global metal indices are displaying a softer trend. The report attributes this divergence to a lag in transmission across various economic sectors.

Within the core WPI basket, several categories recorded price increases in April, including:

• Chemicals and chemical products
• Fabricated metal goods (excluding machinery and equipment)
• Machinery and equipment
• Other manufactured items

In contrast, prices dipped in segments like textiles, pharmaceuticals, and paper and paper products.

The steep fall in WPI was primarily driven by a decline in fuel prices, with the fuel index dropping sharply to -4.35% in April, down from -1.10% in March. This was largely due to a global slump in oil prices, amid mounting concerns about a possible global recession.

Looking ahead, the report warns that wholesale inflation will remain sensitive to fluctuations in food and commodity prices, especially metals and crude oil, both of which have shown signs of revival following the recent US-China trade agreement.

“Going forward, trends in WPI are likely to be shaped by sequential increases in food and commodity prices, particularly oil and metals,” the report concluded.

While consumer price index (CPI) food inflation remains subdued, the rise in wholesale food prices signals a resurgence of inflationary pressures in the near term.