Has India’s WPI Inflation Hit a 14-Month Low of 0.39% in May?
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Synopsis
India's inflation rate has hit a remarkable low, with the WPI reaching just 0.39% in May. Dive into the details of this significant economic shift and its implications for consumers and the banking sector. Understanding these trends is vital for assessing the future of the Indian economy.
Key Takeaways
- WPI inflation drops to 0.39%, the lowest in 14 months.
- Food prices and fuel costs contribute to inflation decline.
- RBI cuts repo rate to 5.5% to support economic growth.
- Consumer Price Index inflation at 2.82%, lowest since February 2019.
- Future inflation outlook revised downwards to 3.7% for 2025-26.
New Delhi, June 16 (NationPress) The annual inflation rate in India, gauged by the Wholesale Price Index (WPI), has further declined to a remarkable 14-month low of 0.39% as of May, down from 0.85% in April and 2.05% in March, as per data released by the Ministry of Commerce and Industry on Monday.
In May, the month-over-month change in WPI inflation recorded a negative shift of (-)0.06% compared to April, indicating a consistent downward trend in inflation.
Price reductions in food items and fuels like petrol and diesel during May contributed to the overall negative month-on-month inflation rate.
Additionally, the nation’s inflation rate based on the Consumer Price Index (CPI) fell to 2.82% in May this year, marking the lowest point of retail inflation since February 2019, as reported last week.
Food inflation decreased to 0.99% in May, the lowest since October 2021, marking the seventh consecutive month of decline due to increased agricultural output.
The Reserve Bank of India (RBI) has also adjusted its inflation forecast for 2025-26 downwards from 4% to 3.7%, as stated by Governor Sanjay Malhotra on Friday.
This steep decline in inflation has prompted the RBI to implement a 50 basis points cut in the repo rate, lowering it from 6% to 5.5%, aimed at stimulating economic growth during the recent monetary policy review.
Furthermore, the RBI has introduced a 100 basis point cut in the Cash Reserve Ratio (CRR), from 4% to 3%, to be executed in four phases of 25 bps each. This measure is anticipated to inject Rs 2.5 lakh crore into the banking system, enhancing liquidity and supporting credit flow.
The RBI Governor emphasized that inflation has notably softened over the past six months, dropping from above the tolerance band in October 2024 to significantly below the target, with indications of widespread moderation.
The current short-term and medium-term outlook instills confidence not only for a sustainable alignment of headline inflation with the 4% target but also the expectation that it may undershoot the target marginally throughout the year.
Point of View
I believe that this significant decline in inflation underscores a positive trend for the Indian economy, suggesting that the measures taken by the Reserve Bank of India are beginning to yield results. It is essential for all stakeholders to remain informed and engaged as we navigate this evolving economic landscape.
NationPress
16/06/2025
Frequently Asked Questions
What is the current WPI inflation rate in India?
The current WPI inflation rate in India is 0.39% as of May, marking a 14-month low.
How has food inflation changed recently?
Food inflation has decreased to 0.99% in May, the lowest level since October 2021.
What actions has the RBI taken in response to declining inflation?
The RBI has cut the repo rate by 50 basis points and reduced the Cash Reserve Ratio by 100 basis points to enhance liquidity.
What does a decrease in WPI inflation indicate?
A decrease in WPI inflation indicates lower price pressures in the wholesale market, which can benefit consumers.
How often is inflation data updated in India?
Inflation data is typically updated monthly, reflecting the most recent economic conditions.
