New Delhi: The US-Iran war has started to directly affect inflation in India with the Wholesale Price Index (WPI) rising 3.88% in March 2026. Rising costs of crude oil and gas, costs for which have increased by 36%, have had a spillover effect across categories, affecting prices across the domestic supply chain.
The cost of manufactured products has also risen, as the supply chain issues relating to the US-Iran war have affected the domestic sector, according to data released by the government.
The Fuel Factor
The oil and gas supply disruptions from the Middle East have forced a rise in domestic prices for commodities linked to them to rise by a staggering 36% in March alone. However, this was partially offset by negative electricity prices that fell by 5.05% in March. This lowering of prices has been due to stronger grid management and increased renewable energy generation. If electricity prices weren’t in negative territory, the WPI figure could’ve breached the 4% mark, causing concern amongst policymakers.
To offer some relief, the government has reduced excise duty by ₹10 per litre on both petrol and diesel and has ensured that fuel retailers don’t pass the higher prices to consume₹ This has helped keep food inflation in check now, with prices easing to 1.90% in March from 2.19% in February.
Since the start of the war, crude prices have surged from about $70 per barrel to around $122 per barrel in March, an increase of nearly 75% in four weeks.
