Wholesale inflation falls to a 14-month low of 0.39% in May

WPI for May

India’s wholesale inflation eased to a 14-month low of 0.39 percent in May down from 0.85 percent in April, according to data released by the government on June 16. This marks the third consecutive month of easing in the Wholesale Price Index (WPI).

"Aided by a favourable base, the WPI inflation expectedly flattened further to a 14-month low of 0.4 percent in May 2025 from 0.9 percent in April 2025... The cooling was broad-based, with the food, non-food manufacturing, minerals, and fuel and power segments contributing to the dip in the headline print between these months. Notably, the WPI food inflation print slumped to 1.7 percent in May 2025, the lowest in 19 months, amid the subdued sequential uptick in prices,” Rahul Agrawal, senior economist, Icra Ltd.

Primary article inflation declined 2 percent in nearly two years, while manufactured goods inflation was at a seven month low in May.

Manufactured products account for nearly two-thirds of the index.

The latest data indicates a continued cooling of inflation in India, following a broader trend seen in the Consumer Price Index (CPI), which also dropped to a near six-year low of 2.82 percent in May 2025. This reflects sustained moderation in food inflation, which fell below 1 percent for the first time in nearly four years.

Throughout FY24, WPI inflation remained mostly subdued. While there was a mild uptick in the early part of FY25, wholesale price inflation in India has stayed well below the 3 percent mark for much of the year.

The steady decline in both retail and wholesale inflation has given the Reserve Bank of India (RBI) room to ease monetary policy. The Monetary Policy Committee (MPC) delivered a 50 basis point rate cut in June, following two earlier 25 bps cuts in February and April. As a result, the RBI repo rate now stands at 5.5 percent, a full percentage point lower than at the start of 2025.

Economists expect further RBI rate cuts in 2025 if disinflation persists. Supporting this outlook, the central bank revised its FY26 inflation forecast to 3.7 percent, down from 4 percent previously projected.

Wholesale inflation is also likely to stay contained below 2 percent.

“For FY26, WPI inflation is projected to average around 1.5%. Going forward, it will be essential to closely monitor both geopolitical developments and global trade dynamics, as these factors will have significant implications for inflation and input cost trends,” said Rajani Sinha, chief economist, CareEdge.