new delhi, April 16 -- India's wholesale inflation, as measured by the Wholesale Price Index (WPI), rose sharply to 3.88% year-on-year in March, from 2.13% in February, data released by the ministry of commerce and industry on Wednesday showed. This is the highest since January 2023, when WPI inflation stood at 4.8%. Wholesale prices also rose 1.64% month-on-month in March, up from 0.38% in February. The uptick was driven by higher prices of crude petroleum and natural gas in the primary articles group; mineral oils in the fuel and power group; and chemicals, textiles, rubber and plastic products, and electrical equipment in manufacturing. These categories are closely linked to crude oil and gas prices, which have been impacted by the war in West Asia. "The latest WPI data reflects a stronger impact of the West Asia crisis, rising by 1.7 pp compared to a modest 0.2 pp increase in retail inflation compared to February prints. This divergence is driven by a sharp increase in the bulk diesel and other commercial fuel prices, while retail petrol and diesel prices remained unchanged," said Rajani Sinha, chief economist at CareEdge Ratings. "The sharp uptick in WPI heightens the risk of second-round effects gradually feeding into retail prices," she added. A disaggregated reading shows inflation in primary articles, which have a 22.62% weight in the index, rose to 6.36% in March from 3.27% in February, the highest since October 2024. Within this, food articles inflation eased to 1.90% from 2.19%, while non-food articles inflation accelerated to 11.50% from 8.80%-the highest since July 2022. Within non-food primary articles, crude petroleum and natural gas swung from a deflation of 2.56% in February to an inflation of 35.98% in March, the highest since December 2022. Crude petroleum inflation alone was 51.57% year on year, the highest since July 2022. "Notably, the crude petroleum index in the WPI has risen by 49% on a month-on-month basis in March 2026, similar to the rise in Brent crude oil prices. Interestingly, there is a change in the composition of the Indian basket of crude oil in March 2026 vis-a-vis February 2026, with a larger weight assigned to Brent compared to the sour West Asian grades, that have seen larger price spikes owing to the West Asia crisis," said Rahul Agrawal, senior economist at ICRA. The WPI food index remained largely stable at 1.85% annually in March, though it edged down 0.05% sequentially. Manufactured products inflation rose to 3.39% from 2.92%, with 16 of 22 sub-groups recording monthly price increases. Chemicals, textiles, rubber and plastic products, and electrical equipment drove the increase. Fuel and power inflation turned positive at 1.05%, the highest since July 2024, driven entirely by mineral oils. Prices in the group rose 4.13% month-on-month, led by an 8.77% increase in mineral oil prices, even as electricity prices fell 5.07%. According to Sinha, even with an early resolution of the West Asia crisis, crude oil prices are still likely to average $85-90 a barrel in FY27. "While there will be limited pass through to retail consumers, there will be an indirect impact with rising inputprices. Moreover, there arealso concerns around the higher probability of El Nino this year, with adverse implications for food inflation. We expect WPI inflation toaverage around 5% in FY27," she said....