Union Bank Sounds Alarm: Metal Price Surge to Fan Wholesale Inflation Flames

Unknown Apr 02, 2026 1,150 Views

India's wholesale inflation prospects are under fresh headwinds as metal prices hold on to their rising momentum, with Union Bank of India warning that the trend will continue to keep the Wholesale Price Index (WPI) under pressure in the months ahead. Metals Drive Inflation Tre...

Metals Drive Inflation Trend

Even though headline WPI inflation plummeted to a 13-month low of 0.85% in April 2025-principally on the back of a steep decline in fuel prices-metal prices have recorded a sequential uptick. Iron and steel, specifically, have contributed disproportionately to this inflationary impetus, even as metal indices abroad have behaved differently, perhaps on account of a delayed transmission of prices across industries.

Core WPI Remains Sticky

Core WPI (apart from food and fuel) softened to 1.40% in April from 1.59% in March, but the increase in metal prices, including chemicals, fabricated metal products, and machinery, still keeps a lid on manufacturing costs.

Sectoral Divergence:

While industry categories such as textiles, pharmaceuticals, and paper products reported month-on-month falls, product categories linked to metals and chemicals improved, underlining the skewed effect of movements in commodity prices.

Looking Ahead:

Union Bank of India's report estimates that WPI will be impacted by a sequential increase in food and commodity prices, particularly oil and metal, after the recent US-China trade pact. The about-turn in WPI food inflation and the acceleration in core commodities indicate price pressures could make a comeback at any time.

Global and Domestic Factors:

While international oil prices have moderated and fuel WPI continues to be in the negative, the consistent rise in metals and possible global supply chain dislocations may continue to keep inflation risks on the table for producers and policymakers.

Sources: Economic Times, Business Standard, The Hindu Business Line

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