Wholesale inflation falls to 25-month low of -0.58% in July

WPI for July

India’s wholesale price index (WPI) declined to a 25-month low of -0.58 percent in July as compared with -0.13 percent in June, government data showed.

This marks the second straight month of wholesale deflation, as food and crude prices remained subdued.

"Deflation in food articles, crude oil, and basic metals has kept WPI in the contractionary zone, although modest price gains in manufactured products have partly offset the decline," said Rajani Sinha, chief economist, CareEdge.

The decline in WPI aligns with the easing of retail inflation, which slipped to an eight-year low of 1.6 percent in July as food inflation slipped further.

Food inflation in wholesale markets remained in negative territory for the second consecutive month, with deflation deepening to -2.2 percent from -0.3 percent in June, largely led by vegetables and pulses.

Vegetable deflation widened to 29 percent compared with 23 percent in the previous month, while potato and onion inflation was a high 41.43 percent and 44.4 percent, respectively.

Fruits were in deflation at -2.65 percent, while oil seeds inflation was a high 9.8 percent.

On the other hand, manufactured products witnessed a slight uptick in inflation to 2.1 percent from 2 percent in the previous month, as core inflation rose further.

Sequentially, wholesale prices rose 0.4 percent in the month.

Economists expect WPI inflation to return to positive territory in August, as heavy rains push up prices of persishables and crude oil prices rise. The depreciation of he rupee is also likely to have a bearing on the reading.

"We expect WPI inflation to move back into positive territory as the base effects fade and seasonal price increases continue. The rise is likely to be only gradual though," said Astha Gudwani of Barclays.

However, experts indicate wholesale inflation is likely to be muted for the year at 1 percent.

"We expect the WPI inflation to average at ~1% in FY2026, which along with the CPI inflation forecast of 3.0-3.2%, implies that nominal GDP growth is likely to be limited to ~8% in the fiscal, as against 9.8% in FY2025," said Rahul Agrawala of ICRA.