While CPI inflation is falling, WPI inflation is still quite high? What does that mean?

For the month of September 2021, the retail CPI inflation tapered lower to 4.35% but the wholesale price inflation (WPI) or producer inflation still stayed in double digits. This is the sixth consecutive month of double-digit WPI inflation. This is relevant because WPI inflation is a barometer of producer inflation and it could be indicative that further supply chain driven inflation in India could be on the cards.

WPI inflation in Sep-21 at 10.66% was 73 bps lower than 11.39% in Aug-21. However, the big worry for WPI inflation remains crude oil due to its strong downstream effects on other commodity prices. Interestingly, wholesale fuel and power inflation touched 24.81% in September; nearly twice that of retail fuel and power inflation.