WPI Falls to 0.13% in June 2025, Below Forecasts

India’s wholesale inflation, measured by the Wholesale Price Index (WPI), fell to 0.13% in June 2025—its lowest level in 20 months—indicating a clear deceleration in price growth. According to government data released recently, this is a decline from 0.39% recorded in May 2025 and much lower than the 0.52% forecasted by economists in a Reuters poll. The data offers encouraging signs for consumers and policymakers alike, suggesting some relief from persistent inflationary pressures.

Food Prices Drive the Downtrend, Despite Volatility

A key contributor to the softening WPI has been the relative stabilisation in food prices, though volatility remains. Vegetable inflation stood at 22.65% in June, slightly up from 21.62% in May. Onion prices surged dramatically by 33.49%, compared to 14.41% in the previous month, while potato prices declined by 32.67%, steeper than May’s 29.42% drop. Pulses also saw a significant decline, falling by 22.65% in June, compared to a 10.41% drop in May. Grain prices registered a modest increase of 3.75%, up slightly from May’s 2.56%.

Fuel and Energy Prices Soften, Manufacturing Stable

Fuel and electricity inflation eased considerably, coming in at 2.65% in June, compared to a sharp 22.27% in May. Manufactured products, which make up over 60% of the WPI basket, recorded an inflation rate of 1.97%. Inflation in primary articles also saw a sharper fall—from 3.38% in May to 2.02% in June—further contributing to the cooling of overall wholesale inflation.

Retail Inflation at Six-Year Low

Retail inflation, too, has shown a marked decline, standing at 2.82% in June—its lowest level since February 2019. This figure is 34 basis points lower than the previous month and reflects the wider impact of falling food prices on household spending. The combined decline in wholesale and retail inflation points to a broader cooling trend in the Indian economy.

RBI Sees Balanced Inflation Risks, Lowers FY26 Forecast

The Reserve Bank of India (RBI) has taken note of the easing price pressures and, in its April policy review, revised its inflation forecast for FY26 down by 0.5%, projecting an average rate of 4.0%. The quarterly projections are 3.6% (Q1), 3.9% (Q2), 3.8% (Q3), and 4.4% (Q4). The RBI maintains that inflation risks are currently balanced, largely due to falling food and energy prices.

Relief for Consumers, But Risks to Growth Remain

The fall in prices of key commodities like vegetables, pulses, and fuel has brought much-needed relief to consumers and reduced cost pressures across sectors. Lower manufacturing and energy costs could also benefit industries by curbing operational expenditures. However, economists caution that prolonged low inflation may reflect weak demand and could pose risks to broader economic momentum.

Next WPI Data Due in August

The next set of WPI inflation data is scheduled for release on August 14, 2025. Analysts believe it will offer further insight into whether the recent easing trend is sustainable or if new pressures might emerge in the coming months.

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