Key Points

The WPI inflation for July is also lower than the -0.13 per cent that was recorded in the previous month of June. WPI-based inflation has been steadily easing since March and hit a 14-month low of 0.39 per cent in May.

There was a 2.15 per cent decline in the food index while the cost of fuels such as petrol and diesel fell by 2.43 per cent during July compared to the same month of the previous year, resulting in the inflation rate turning negative.

The decline in WPI inflation is also expected to lead to further easing of retail inflation as the drop in prices of bulk goods is passed on to the retail level and the decline in fuel prices leads to a drop in transport costs.

Meanwhile, the country’s inflation rate based on the Consumer Price Index (CPI) eased further to 1.55 per cent in July this year compared to the same month of the previous year as prices of food declined during the month. This is the lowest level of year-on-year retail inflation since June 2017, according to a statement issued by the Ministry of Statistics.

The retail inflation in July was also lower by 55 basis points than the 2.1 per cent for the previous month of June this year which was the lowest level of retail inflation since January, 2019.

Food Inflation in July this year fell into the negative zone at -1.76 per cent as prices declined compared to the same month of the previous year.

The significant decline in headline inflation and food inflation during July, 2025 is mainly attributed to favourable base effect and to decline in inflation of pulses, vegetables, cereals, egg and sugar. The inflation rate also fell due to the decline in cost of transport and communication and education. Besides, there was a mild drop in housing inflation during the month.

Meanwhile, the Reserve Bank (RBI) has pegged India’s CPI inflation at 3.1 per cent for 2025-26 as the steady progress of the monsoon and robust kharif sowing are expected to keep food prices in check.

RBI Governor Sanjay Malhotra recently said, “The inflation outlook for 2025-26 has become more benign than expected in June. Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation.”

CPI inflation, however, is likely to edge up above 4 per cent by Q4:2025-26 and beyond, as unfavourable base effects, and demand side factors from policy actions come into play. Barring any major negative shock to input prices, core inflation is likely to remain moderately above 4 per cent during the year, he explained.

- IANS