Has India’s WPI Inflation Hit a Two-Year Low in July?

New Delhi, Aug 14 (NationPress) The annual inflation rate in India, measured by the Wholesale Price Index (WPI), has dipped to a two-year low of (-) 0.58% in July of this year, marking a significant decline compared to the same month last year. This drop is primarily attributed to a reduction in the prices of food items and fuels including petrol, diesel, and natural gas, as reported by the Ministry of Commerce and Industry on Thursday.

The WPI inflation for July is also lower than the -0.13% recorded in June. Since March, WPI-based inflation has been consistently declining, reaching a 14-month low of 0.39% in May.

Notably, the food index experienced a 2.15% decrease, while fuel costs, including petrol and diesel, fell by 2.43% compared to July of the previous year, pushing the inflation rate into negative territory.

This WPI inflation decrease is anticipated to contribute to a further reduction in retail inflation, as the drop in bulk goods prices trickles down to retail levels, and the fall in fuel prices leads to lower transportation costs.

On another note, India's inflation rate based on the Consumer Price Index (CPI) also saw a decline, reaching 1.55% in July, compared to the same month of the previous year. This marks the lowest year-on-year retail inflation since June 2017, according to the Ministry of Statistics.

The July retail inflation was 55 basis points lower than the 2.1% recorded in June, which was the lowest since January 2019.

Food inflation in July has entered the negative zone at -1.76%, reflecting a drop in prices compared to the same month last year.

The notable drop in both headline and food inflation in July 2025 is largely due to a favorable base effect and declines in the prices of pulses, vegetables, cereals, eggs, and sugar. Additionally, reductions in transportation and communication costs, as well as education, contributed to this decline. There was also a slight dip in housing inflation during the month.

The Reserve Bank of India (RBI) has projected the CPI inflation for 2025-26 at 3.1%, as ongoing favorable conditions from the monsoon and robust kharif sowing are expected to stabilize food prices.

RBI Governor Sanjay Malhotra noted, "The inflation outlook for 2025-26 has improved compared to expectations in June. Favorable base effects, alongside healthy kharif sowing and sufficient foodgrain buffers, have played a significant role in this moderation."

However, CPI inflation may rise above 4% by Q4:2025-26 and beyond, influenced by adverse base effects and demand-side factors. Unless there are major shocks to input prices, core inflation is projected to remain modestly above 4% throughout the year, he elaborated.