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Key Points

India's wholesale inflation has hit a two-year low of -0.45% in July, driven by falling food and fuel prices. Food inflation dropped sharply to -1.72%, with cereals, pulses, and spices leading the decline. The RBI kept interest rates unchanged, citing stable core inflation and a positive monsoon outlook. Global commodity volatility and domestic supply conditions will shape inflation trends in coming months.

Key Points: India's WPI inflation hits 2-year low as food prices drop

  • WPI inflation drops to -0.45% in July, lowest since August 2023
  • Food inflation plunges to -1.72% amid deflation in cereals and pulses
  • Fuel prices remain in contraction at -4.90% due to weak demand
  • RBI maintains repo rate at 5.5%, citing stable core inflation
2 min read

India's WPI inflation in July likely drops to 2-year low as food prices decline: Report

India's wholesale inflation falls to -0.45% in July, marking the lowest level since August 2023 amid declining food and fuel prices.

"July '25 WPI YoY likely fell to almost 2 years' low of -0.45 per cent – Union Bank of India report"

New Delhi, Aug 12

Wholesale inflation in India likely dropped to a near two-year low in July, due to a significant decline in food and fuel prices, according to a Union Bank of India report.

The Wholesale Price Index (WPI) is estimated to have fallen to -0.45 per cent year-on-year in July, down from -0.13 per cent in June. This is the lowest level since August 2023, signalling a continued deflationary trend in wholesale prices.

"July '25 WPI YoY likely fell to almost 2 years' low of -0.45 per cent," the report said.

The report indicated that the decline in WPI reflects the trend in retail inflation (CPI), as both the food and fuel subsegments slipped deeper into deflation territory during the month. Core WPI, excluding food and fuel, however, improved to 1.50 per cent in July, up from 1.06 per cent in June.

Food inflation in the wholesale market dropped to -1.72 per cent year-on-year in July, down from -0.26 per cent in June. Fuel inflation remained in the contraction zone, decreasing to -4.90 per cent from -4.23 per cent in June.

The decline is partly due to base effects, with all sub-segments showing an increase compared to the previous month. Deflation was notable in cereals, pulses, fruits, spices, oils, and other food articles, with pulses in negative territory since February 2025.

The report warned that global commodity prices may stay volatile due to uncertainties from new US trade tariffs and ongoing geopolitical conflicts. Weak demand and adequate supply may limit any sharp upward movement in prices.

Monsoon patterns and potential weather disruptions remain key factors to watch, as they could impact the supply chain and influence WPI in the short term.

The report indicated that global market inflationary pressures may arise, but domestic conditions will be key in determining the wholesale inflation trend in the upcoming months.

The Reserve Bank of India (RBI) had maintained the repo rate at 5.5 per cent in its August Monetary Policy Committee (MPC) meeting. It cited stable core inflation at around 4 per cent and a favourable inflation outlook supported by a good monsoon for the neutral stance.

The RBI lowered its FY26 inflation projection to 3.1 per cent, with CPI inflation at 2.1 per cent in June 2025.

-- IANS

- IANS

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Reader Comments

A
Ananya R
While the numbers look positive, I'm not seeing much difference in vegetable prices at my local market in Bangalore. Maybe there's a lag effect? Or are retailers not passing on the benefits?
V
Vikram M
The fuel price drop is significant! Petrol prices have come down by ₹3 in my city. This WPI data explains why. Hope RBI considers cutting interest rates soon to boost economic growth.
S
Sarah B
As someone running a small food business, I can confirm wholesale prices for pulses and oils have decreased. But we need to watch the monsoon situation carefully - one bad spell can reverse these gains quickly.
K
Karthik V
The core inflation (excluding food and fuel) going up is concerning. Shows manufacturing and other sectors are still facing cost pressures. Government should focus on industrial growth too, not just agriculture.
P
Priya S
Positive news but let's not celebrate too soon. Global uncertainties mentioned in the report are real threats. We saw how Ukraine war disrupted everything. Need to build stronger supply chains.
M
Michael C
Interesting to see India's economic indicators improving while many Western nations struggle with inflation. The RBI's conservative approach seems to be paying off. Good case study for other central banks.

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