According to a report by the Union Bank of India, wholesale inflation in India likely fell to a near two-year low in July as food and fuel prices fell significantly.
The Wholesale Price Index (WPI) is expected to have fallen to -0.45% year on year in July, down from -0.13% in June. This is the lowest level since August 2023, indicating a continued decline in wholesale prices.
Key Highlights
- India’s WPI inflation likely plunged to -0.45% in July, driven by steep declines in food and fuel prices.
- June WPI inflation turned negative at -0.13%, the first drop in 19 months, led by falling vegetable and energy costs.
"July '25 WPI YoY likely fell to almost 2 years' low of -0.45 per cent," according to the analysis.
According to the report, the decline in WPI reflects the trend in retail inflation (CPI), with both the food and fuel subsegments falling deeper into deflation during the month. Core WPI excluding food and fuel rose to 1.50 percent in July, up from 1.06 percent in June.
Food inflation in the wholesale market fell to -1.72% year on year in July, down from -0.26% in June. Fuel inflation remained in the contraction zone, falling to -4.90% from -4.23% in June.
The decline is partly due to base effects, as all sub-segments increased over the previous month. Cereals, pulses, fruits, spices, oils, and other food articles all experienced deflation, with pulses falling since February 2025.
The report cautioned that global commodity prices may remain volatile due to uncertainties caused by new US trade tariffs and ongoing geopolitical conflicts. Weak demand and adequate supply may limit any sharp price increases.
Monsoon patterns and potential weather disruptions remain important factors to monitor, as they may have an impact on the supply chain and WPI in the short term.
Also Read: RBI Governor Malhotra Hints at Further Rate Cuts Amid Cooling Inflation
The report stated that global market inflationary pressures may emerge, but domestic conditions will be critical in determining the wholesale inflation trend in the coming months.
The Reserve Bank of India (RBI) maintained the repo rate at 5.5 percent during its August Monetary Policy Committee (MPC) meeting. It justified the neutral stance by citing stable core inflation of around 4% and a favorable inflation outlook supported by a strong monsoon.
The RBI reduced its FY26 inflation projection to 3.1%, with CPI inflation at 2.1 percent in June 2025.
