The closure of the Hormuz Strait ignites inflation in India as crude oil and metal prices surge, and the 8.3% WPI sounds the alarm.
- Indian rating agency Crisil has warned that the closure of the Strait of Hormuz will drive up prices of crude oil, natural gas, and metals, intensifying inflationary pressures in India. Rising manufacturing costs are gradually being passed on to consumers, with core CPI inflation facing upside risks in particular.
- Data shows that India's overall Wholesale Price Index (WPI) inflation rate in April surged from 3.9% in March to 8.3%. Non-food WPI jumped from 4.7% to 10.9%. Among key commodities, copper prices rose by 17.3%, aluminium by 20.6%, crude oil-related products soared by 49.3%, and natural gas-related products increased by 19.1%.
- Crisil pointed out that after remaining below 1.0 for 44 consecutive months, the enterprise input-output ratio broke through this critical threshold in April. Input prices rose by 6.2% during the month, while output prices only increased by 0.7%. Industries such as steel, chemicals, fertilizers, plastics, and non-ferrous metals are facing severe cost pressures.
- Although domestic demand remains stable, companies still have room to increase prices without significantly impacting sales. Even if the Strait of Hormuz reopens, input costs are expected to remain high this year. The conflict in West Asia is regarded as one of the most severe oil shocks in recent years, with its impact extending beyond the energy sector to various industrial raw materials.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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