Week in Numbers: Tracking India’s Economic Pulse

India’s annual wholesale price inflation rose to a three-and-a-half-year high of 8.30% in April from 3.88% a month earlier, as the impact of the war in West Asia started to reflect in India’s inflation data. The Wholesale Price Index rose by a record 3.86% month-on-month in April as prices of crude oil, natural gas, petroleum products, and related chemicals shot up sharply.

The rise was mainly due to a 15-18% sequential increase in the prices of crude petroleum and natural gas, and a 10-122% rise in prices of petroleum products such as petrol, diesel, liquefied petroleum gas, kerosene, and bitumen. Prices of some petroleum product-related chemicals, such as polyethylene and ethylene oxide, and some basic metals increased by 10-25%.

WPI inflation in April was more than double the 3.48% recorded under the Consumer Price Index. The wide gap between the two inflation measures is likely to persist as long as crude oil prices remain elevated and the Indian government does not fully pass through the higher prices to consumers.

The government has allowed state-owned oil marketing companies to increase the retail prices of petrol and diesel by only 3.0-3.5%, which is minuscule compared with the sharp rise in crude oil, natural gas, and other petroleum product prices.

Core WPI inflation rose to a 43-month high of 5.0% in April from 3.7% in March, mainly due to an increase in the prices of basic metals and petroleum product-related chemicals. There is a strong correlation between core WPI inflation and core CPI inflation, and the sharp rise in core WPI in April is likely to transmit to the latter in the coming months.

WPI inflation is likely to continue rising in the near term due to the increase in crude oil and petroleum product prices.

India’s retail inflation rose to a 13-month high of 3.48% in April from 3.40% in March. The impact of the war in West Asia on Consumer Price Index inflation remained largely limited to shortages of cooking gas and the resultant increase in restaurant service charges. In fact, CPI inflation in April was sharply below the consensus estimate of around 3.8%. The impact has been limited mainly because the government had initially kept retail fuel prices unchanged.

Core inflation, which excludes food and beverages, electricity, gas, and transport fuels, remained unchanged at 3.7% in April, while core-core inflation, which also excludes precious metals, remained steady at 1.9%.

Risks are mounting. Oil marketing companies have increased the retail prices of petrol and diesel by about 3.0-3.5%, with further hikes likely in store. The hike in transport fuels so far is likely to add 10-12 basis points to headline inflation.

There is also the risk of food prices rising due to a likely below-normal monsoon. India Meteorological Department has projected the southwest monsoon in 2026 to be 92% of the long period average, the weather department’s lowest forecast in almost three decades.

Notwithstanding the risks, CPI inflation is likely to remain sharply below WPI inflation unless the government allows full pass-through of the increase in crude oil prices to retail prices.

India’s merchandise trade deficit widened to $28.38 billion in April from $20.67 billion a month earlier and $27.10 billion a year ago, despite a double-digit year-on-year growth in exports. Merchandise exports rose 13.8% year-on-year — the fastest pace in five months — to $43.56 billion. In absolute terms, exports in April were the second-highest ever and the highest in 49 months. Imports rose 10.0% to $71.94 billion. Imports in April were also the second-highest ever in absolute terms. Growth in exports was led by petroleum products and electronic goods. Petroleum product exports rose 34.7% to $9.59 billion in April, while electronic goods increased 40.3% to $5.18 billion. Among imports, growth was driven by precious metals and electronic goods. Gold and silver imports increased 85.4% to $6.04 billion, while electronic goods rose 38.2% to $12.78 billion.

Imports of crude petroleum and products declined 10.0% year-on-year to $18.63 billion in April despite the sharp rise in crude oil prices. This could probably be explained by the decline in import volumes due to shipping disruptions in the Strait of Hormuz. With crude prices remaining above $100 per barrel, trade deficit is likely to remain elevated.

The government has increased the import duty on gold and silver to 15% from 6% earlier in a bid to curb their imports and conserve foreign exchange.

Automobile wholesales remained robust in April, with total despatches rising 27.9% year-on-year to 2.38 million units. The growth was broad-based, driven by strong demand across two-wheelers, passenger vehicles, and three-wheelers. Automobile sales have remained extremely buoyant, with despatches growing in the double digits over the last six months.

Two-wheeler despatches rose 28.4% to 1.87 million units, supported by a 30.6% surge in motorcycles and a 26.2% increase in scooters. Passenger vehicle wholesales grew 25.4% to 437,312 units. Automobile production in April rose 26.0% to 2.92 million units, suggesting that manufacturers expect demand to remain strong in the months ahead.

India’s mutual fund industry witnessed record inflows in April despite the heightened uncertainty in financial markets due to the war in West Asia. Open-ended mutual fund schemes saw record inflows of ₹3.27 trillion in April, led by ₹2.47 trillion in debt schemes. Open-ended mutual fund schemes had seen a record outflow of ₹2.40 trillion a month earlier.

Notwithstanding sharp volatility in stock markets, equity schemes saw inflows of ₹384 billion in April, compared with a monthly average of ₹289 billion over the previous 12 months. Healthy inflows into equity mutual funds have been one of the reasons why Indian stock markets have remained largely steady despite the huge outflows from foreign portfolio investors in recent months. Inflows into equity mutual funds have remained positive for more than five years now.

Inflows into systematic investment plans remained robust despite volatility in stock markets. Inflows into SIPs were at ₹311 billion in April, marginally lower than ₹321 billion a month earlier, with the number of contributing SIP accounts at 96.5 million. Gold ETFs saw inflows of ₹30 billion in April compared with ₹23 billion a month earlier. 

Tractor sales in the country continued to boom. Domestic sales rose 26.8% year-on-year to 105,021 units in April. This is the ninth straight month that tractor sales have grown in double digits. The tractor industry has been one of the biggest beneficiaries of the GST rate cuts that were carried out in September. Total sales, including exports, rose 27.1% to 114,725 units, while production increased 18.1% to 110,261 units in April.

India’s coal production contracted at the fastest pace in nine months in April as demand remained weak, especially from thermal power plants. Coal production declined 9.0% year-on-year to 74.31 million tonnes in April, marking the second consecutive contraction. Coal despatches declined 1.6% to 86.20 million tonnes. Coal production and demand in recent months have been dampened by lower thermal power generation and higher renewable output. In 2025-26, thermal power generation declined 4.1% to 1,307.13 billion units, while renewable energy generation increased 18.4% to 477.79 billion units.

India’s unemployment rate rose to a six-month high of 5.2% in April from 5.1% in March, led by a sharp increase in rural unemployment. The rural unemployment rate rose to 4.6% from 4.3%, while the urban rate fell to 6.6% from 6.8%. Unemployment among youth rose to 15.3% from 15.2% a month earlier. However, urban youth unemployment fell to 18.0% in March from 18.4% a month earlier. Meanwhile, the overall labour force participation rate — the percentage of the population working or available for work — fell to an eight-month low of 55.0% in April from 55.4% in March.

India’s foreign exchange reserves rose to $696.99 billion as of May 8, up $6.30 billion from a week ago. Foreign currency assets rose $562 million to $552.39 billion, while gold holdings increased $5.64 billion to $120.85 billion. The reserves rose primarily due to higher gold prices.

As the season comes to an end, the area under summer crops was up 3.8% year-on-year at 8.31 million hectares as of May 8. Rice, which accounts for about two-fifths of the summer area, declined 4.2% to 3.11 million hectares. Pulses rose by 5.1% to 2.50 million hectares, while oilseeds increased 12.4% to 1.10 million hectares. The area under summer crops as of May 8 was 10% above normal.

Food grain stocks with the government remained at record highs as of May 1. Total grain stocks, including unmilled paddy, stood at 111.62 million tonnes — the highest ever for May 1. Rice stocks were at 38.96 million tonnes, the highest on record, while wheat stocks were at 42.80 million tonnes, the highest for May 1 in five years. The government held 44.58 million tonnes of unmilled paddy, equivalent to about 29.87 million tonnes of rice. High stocks have prompted the government to allow wheat exports after nearly four years.

The pre-monsoon season has been normal so far, with cumulative rainfall from March 1 to May 15 at 99.9 mm, 4% above the long period average of 96.0 mm.

Reservoir storage levels, though declining, remained well above historical norms. As of May 14, storage was at 63.23 billion cubic metres, or 34% of total capacity — 13% higher than a year earlier and 24% above the 10-year average.

Coming up:

• May 20: Index of Eight Core Industries data for April
• May 21: HSBC India Flash PMI for May
• May 29: Government finances data for 2025-26 

Tailpiece
In April, Telangana had the highest inflation among states and Union territories at 5.81%, followed by Puducherry at 4.41%. Mizoram had the lowest inflation in April at 0.69%.