India’s inflation numbers are beginning to tell two very different stories. One is reassuring. The other is a warning. On paper, retail inflation remains comfortably below the Reserve Bank of India’s medium-term target. That creates the impression that the country has escaped the inflationary turbulence now affecting large parts of the world economy. Yet beneath that surface calm, another indicator has started flashing red. Wholesale inflation has surged sharply, driven overwhelmingly by energy costs and imported commodity pressures linked to the escalating conflict in West Asia.

The divergence matters because wholesale inflation is often where broader inflationary cycles begin. Producers, transporters and manufacturers absorb higher costs initially, but they rarely absorb them indefinitely. Eventually those costs travel through supply chains and appear in the prices that households pay for food, transport, services and consumer goods. India may therefore be entering a delayed inflation phase rather than a controlled one. Fuel is central to this story, especially diesel. Unlike advanced economies where inflation is often driven by consumer demand, India remains........

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