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Key Points

India's wholesale inflation eased to a 14-month low of 0.39% in May, driven by declining food and fuel prices. The RBI has responded with a 50 bps repo rate cut to spur economic growth. Retail inflation also dropped to 2.82%, the lowest since February 2019. The central bank expects inflation to remain below its 4% target in the near term.

Key Points: India's WPI inflation hits 14-month low at 0.39% in May

  • WPI inflation falls to 0.39% in May
  • Food inflation drops to 0.99%, lowest since 2021
  • RBI cuts repo rate by 50 bps to 5.5%
  • CRR reduced to 3%, injecting Rs 2.5 lakh crore liquidity
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India's WPI inflation eases to 14-month low of 0.39 per cent in May

WPI inflation drops to 0.39% in May, marking a 14-month low as food and fuel prices decline, with RBI cutting repo rates by 50 bps.

"Inflation has softened significantly over the last six months from above the tolerance band to well below the target. – RBI Governor Sanjay Malhotra"

New Delhi, June 16

India’s annual rate of inflation based on the Wholesale Price Index (WPI) eased further to a 14-month low of 0.39 per cent in May from 0.85 per cent in April and 2.05 per cent in March, according to data released by the Ministry of Commerce and Industry on Monday.

The month-over-month change in WPI inflation during May stood in the negative zone at (-) 0.06 per cent as compared to the previous month of April, reflecting the declining trend in inflation.

There was a decline in prices of food as well as fuels such as petrol and diesel during the month compared to the previous month, which resulted in the overall month-on-month inflation rate turning negative.

Meanwhile, the country’s inflation rate based on the Consumer Price Index (CPI) has declined to 2.82 per cent in May this year compared to the same month of the previous year. This is the lowest level of retail inflation since February 2019, figures released last week showed.

Food Inflation declined to 0.99 per cent during May, which is the lowest since October 2021. This is the seventh month in a row that food inflation has registered a decline as the agricultural output has been on the rise.

The RBI has also revised its inflation outlook for 2025-26 downwards from the earlier forecast of 4 per cent to 3.7 per cent, Reserve Bank Governor Sanjay Malhotra said on Friday.

The sharp decline in inflation has enabled the RBI to go in for a 50 basis points cut in the repo rate from 6 per cent to 5.5 per cent to spur growth in the economy, in the monetary policy review last week.

The RBI also announced a 100 basis point cut in the Cash Reserve Ratio (CRR), from 4 per cent to 3 per cent, to be implemented in four tranches of 25 bps each. The step is expected to inject Rs 2.5 lakh crore into the banking system, boosting liquidity and supporting credit flow.

The RBI Governor pointed out that Inflation has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of a broad-based moderation.

The near-term and medium-term outlook now gives us the confidence of not only a durable alignment of headline inflation with the target of 4 per cent, as exuded in the last meeting, but also the belief that during the year, it is likely to undershoot the target at the margin.

- IANS

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Reader Comments

R
Rahul K.
Finally some good news for common people! Petrol prices coming down is a big relief. Hope this trend continues and we see benefits at retail level too. RBI's rate cut should help home loan EMIs. 🙏
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Priya M.
While the numbers look positive, I'm not seeing much difference in vegetable prices at my local mandi. Government should ensure wholesale price benefits actually reach consumers. Monitoring is needed!
A
Arjun S.
Smart moves by RBI! The CRR cut will boost liquidity exactly when needed. As a small business owner, I'm hopeful about easier credit access. Economy seems to be stabilizing after tough years.
S
Sunita P.
Good to see food inflation under control after so long. Kisan credit and better monsoon predictions are helping. But we must invest more in cold storage to prevent seasonal price shocks. #FarmersFirst
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Vikram J.
Numbers look impressive but let's not celebrate too soon. Global oil prices remain volatile and our economy is still vulnerable to external shocks. RBI should maintain cautious optimism.
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Neha R.
As someone who tracks economic data, this is remarkable progress! From 7%+ inflation to sub-4% in just 2 years shows policy effectiveness. Hope the growth-inflation balance continues. 🇮🇳

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