Input Costs on Fire: Manufacturers Face Fresh Margin Pressure as Oil, Copper and Aluminium Prices Surge, Says CRISIL

Moneylife Digital Team 27 May 2026

Economy & Nation

The ongoing conflict in West Asia and the closure of the Strait of Hormuz have triggered the largest oil shock globally to date, sharply increasing input costs across sectors and raising concerns about fresh inflationary pressures in India, according to a CRISIL report.

In its latest Quickonomics report titled "Input Costs on Fire", CRISIL said the disruption has widened beyond energy markets and is now impacting several industrial inputs, including copper, aluminium, chemicals, plastics and gas-related products.

“The West Asia conflict has sparked the largest oil shock the world has seen so far. The closure of the Strait of Hormuz has only broadened the shock to other input categories,” the report said.

CRISIL noted that its wholesale price index (WPI)-based input-output ratio crossed the critical 1.0 mark in April 2026 after remaining below that level for 44 consecutive months. The ratio rose to 1.02 as input prices surged 6.2% month-on-month, while output prices increased only 0.7%.

The report pointed out that the last time the ratio crossed 1.0 was in March 2022 following the outbreak of the Russia-Ukraine conflict, and it remained elevated for five months thereafter.

According to CRISIL, the latest rise in input costs has been driven mainly by higher prices of crude petroleum, natural gas, mineral oils and several manufacturing-linked commodities such as steel, basic chemicals, fertilisers, plastics, synthetic rubber, man-made fibres and non-ferrous metals.

The report highlighted that pressure on industrial inputs had already been building during FY25-26. Average copper prices rose 8.7% during the fiscal year, while aluminium prices increased 6.5%, both exceeding their respective decadal inflation averages.

In April 2026 alone, overall WPI inflation jumped to 8.3% from 3.9% in March, while non-food WPI surged to 10.9% from 4.7%.

Among key commodities, copper prices climbed 17.3%, aluminium rose 20.6%, crude oil-related products surged 49.3% and gas-related products increased 19.1% during April, the report noted.

CRISIL warned that manufacturers are likely to continue facing elevated costs even if the Strait of Hormuz reopens, as commodity markets are expected to remain volatile for some time.

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

The ratings agency said the initial impact would be visible in wholesale prices before gradually feeding into retail inflation. According to the report, rising production costs are likely to be passed on to consumers in the coming months, especially since domestic demand has remained resilient so far.

“In the domestic market, with demand holding up so far, there is room to pass on the costs to consumers and support margins. Consequently, CPI inflation, particularly core CPI, could witness upward pressure in the coming months,” CRISIL said.

The report suggests that sectors dependent on imported energy, metals and industrial raw materials could face sustained margin pressure if commodity prices remain elevated, potentially complicating the inflation outlook and monetary policy trajectory in the months ahead.

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