West Asia Crisis May Soon Make Everyday Goods Costlier in India: Crisil

The ongoing West Asia conflict is beginning to impact India far beyond crude oil prices, with rising global commodity and energy costs expected to make everyday consumer goods more expensive in the coming months, according to a Quickonomics report by Crisil.

The report said manufacturers are already facing a sharp rise in input costs across categories such as crude oil, gas, copper, aluminium, plastics and chemicals. However, the prices charged to consumers have not increased at the same pace so far.

According to Crisil, its Wholesale Price Index (WPI)-based input-output ratio crossed the 1.0 mark in April 2026 for the first time in 44 months, indicating that companies are now witnessing input costs rising faster than output prices.

“The ratio stood at 1.02, driven by a 6.2 per cent on-month rise in input prices, while output prices increased a modest 0.7 per cent,” the report said.

In practical terms, this means companies are paying significantly more to manufacture products but are still absorbing a major part of those costs instead of fully passing them on to consumers.

Why Is the Strait of Hormuz So Important?

The report linked the spike in costs directly to the ongoing West Asia crisis and the closure of the Strait of Hormuz, one of the world’s most critical energy trade routes.

“The closure of the Strait of Hormuz has only broadened the shock to other input categories even as manufacturers are already grappling with higher costs from critical inputs such as copper and aluminium,” Crisil said in the report.

The disruption has expanded the inflationary impact beyond fuel markets into wider industrial supply chains, affecting sectors that rely heavily on imported raw materials and energy-linked products.

Which Sectors Could Be Hit the Hardest?

The report noted that the pressure is no longer limited to fuel alone. Prices of key industrial inputs, including crude oil-linked products, metals and gas-related materials, rose sharply in April.

These inputs are widely used across industries such as automobiles, electronics, consumer appliances, construction, packaging, pharmaceuticals and textiles.

“Based on the clustered WPI categories, copper prices surged 17.3 per cent, aluminium 20.6 per cent, crude oil-related 49.3 per cent and gas-related 19.1 per cent in April,” the report said.

Crisil highlighted that rising copper and aluminium prices are especially significant because these metals are essential to manufacturing activity and are heavily used in electric vehicles, power infrastructure, renewable energy equipment, electronics and consumer durables.

Could Consumers Soon Start Paying More?

Crisil warned that while wholesale inflation is likely to show the impact first, higher manufacturing costs are expected to gradually spill over into retail prices and household budgets.

“With input costs expected to remain elevated this year, even after the Strait reopens, manufacturers will continue to face higher costs,” the report said.

“While WPI will be the first to reflect the inflation pressure, rising input costs are soon expected to percolate into consumer prices,” it added.

The report also said companies may now find it easier to pass on rising costs because domestic demand has remained resilient despite global uncertainty.

“In the domestic market, with demand holding up so far, there is room to pass on the costs to consumers and support margins,” Crisil said.

What Does This Mean for Inflation in India?

The report cautioned that India could see upward pressure on Consumer Price Index (CPI)-based inflation, especially core inflation, which excludes food and fuel prices.

If companies begin raising prices across sectors, consumers may eventually pay more for products ranging from electronics and appliances to vehicles, medicines, packaged goods and household essentials.

The findings underscore how geopolitical tensions in West Asia are increasingly influencing India’s domestic economy through higher import costs, disrupted supply chains and rising industrial inflation.

(With inputs from ANI)