How is Falling Wholesale Inflation in India Boosting Demand and Growth?
Click to start listening
Synopsis
The ongoing decline in wholesale inflation in India is more than just a statistic; it's a beacon of hope for economic growth. With operational costs decreasing and domestic demand on the rise, experts are optimistic about the future. Can this trend continue? Discover what industry leaders are saying about the implications for India's economy.
Key Takeaways
- WPI inflation has decreased for seven months consecutively.
- Lower operational costs for businesses can enhance economic growth.
- Positive business sentiment is reported across various sectors.
- Food inflation has significantly declined, benefiting household budgets.
- Experts anticipate continued moderation in WPI inflation.
New Delhi, July 14 (NationPress) The ongoing decline in the wholesale price index (WPI) inflation for seven consecutive months is a positive indicator for India's economy, as it will lower operational expenses for businesses, enhance domestic demand, and foster economic growth, industry specialists stated on Monday.
Hemant Jain, President of the PHD Chamber of Commerce and Industry (PHDCCI), observed that the sustained reduction in wholesale inflation since December 2024 is promising and signifies improving macroeconomic conditions.
He pointed out that WPI inflation fell from 2.57% in December 2024 to (-)0.13% in June 2025, strengthening business confidence across various sectors.
“This decrease in prices will aid businesses in managing their costs more effectively and may stimulate consumption-led growth,” Jain explained, adding that the outlook appears optimistic given the rising domestic demand, anticipated normal monsoon, and vigorous economic activity.
“Looking forward, with the increase in domestic demand, expectations of a normal monsoon, and robust overall economic activity in the nation, we expect WPI inflation to remain moderate in the forthcoming months despite persistent geopolitical uncertainties,” Jain mentioned.
Official statistics from the Ministry of Commerce and Industry revealed that wholesale inflation in June turned negative at (-)0.13%, compared to 0.39% in May.
The last instance of WPI inflation entering negative territory was in April 2023. A similar pattern was observed during the early stages of the COVID-19 pandemic in July 2020.
According to the commerce ministry, the decrease in inflation was primarily due to lower prices of food items, mineral oils, crude petroleum, natural gas, and basic metal products.
Jain reiterated this, noting a significant reduction in prices of primary articles (falling from -2.02% in May to -3.38% in June), fuel and power (from -2.27% to -2.65%), and manufactured goods (from 2.04% to 1.97%).
Food inflation, which directly impacts household budgets, also saw a considerable decline—from 5.83% in January 2025 to (-)3.75% in June—thanks to lower prices for cereals, vegetables, pulses, fruits, eggs, meat, fish, and milk.
Responding to the data, Rahul Agrawal, a senior economist at ICRA, mentioned that the seasonal uptick in food prices in July has been modest thus far and may keep food inflation in the deflationary zone unless vegetable prices experience a sudden spike.
“Moreover, a reduction in global crude oil prices and a stable USD/INR exchange rate are anticipated to sustain the current deflationary trend,” he added.
“Overall, we expect the headline WPI to continue in deflation in July 2025 as well,” he stated.
Point of View
I emphasize that the persistent decline in wholesale inflation is a crucial development for India's economic health. This trend not only alleviates pressures on businesses but also enhances consumer confidence. The government and industry must remain vigilant to ensure that this positive momentum is maintained despite global uncertainties.
NationPress
14/07/2025
Frequently Asked Questions
What is WPI inflation?
WPI inflation, or Wholesale Price Index inflation, measures the average change in selling prices received by domestic producers for their output. It serves as an important indicator of inflationary trends in the economy.
Why is falling WPI inflation important?
Falling WPI inflation is crucial as it reduces operational costs for companies, boosts domestic demand, and can lead to economic growth. It also indicates healthier macroeconomic conditions.
What factors contributed to the decline in WPI inflation?
The decline in WPI inflation has been attributed to lower prices of food articles, mineral oils, crude petroleum, natural gas, and basic metal products.
What impact does this have on consumers?
As WPI inflation falls, the costs of goods may decrease, leading to lower prices for consumers, which can ease household budgets and increase purchasing power.
What is the outlook for WPI inflation in the coming months?
Experts forecast that WPI inflation will remain moderate in the upcoming months due to rising domestic demand and expectations of a normal monsoon, despite ongoing global uncertainties.
