India’s Wholesale Price Inflation Hits Two-Year Low
India’s factory gate inflation, measured by the Wholesale Price Index (WPI), recorded a two-year low of -0.58 per cent in July 2025. This marked the second consecutive month of negative inflation, mainly driven by falling food and fuel prices. Despite this overall decline, prices of manufactured goods showed an upward trend during the same period.
Wholesale Price Index
The WPI is the primary inflation indicator in India. It tracks price changes of a basket of goods at the wholesale level. The index is divided into three groups – Primary Articles (22.6%), Fuel and Power (13.2%), and Manufactured Products (64.2%). Food items from Primary Articles and Manufactured Products together form 24.4% of the total weight. Key subgroups include Basic Metals, Food Products, Chemicals, and Textiles.
Decline in Food Prices
Primary food articles fell by 6.29% in July, marking the third consecutive month of deflation. Onion prices plunged by 44.4%, potatoes by 41.3%, and vegetables by 28.9%. Pulses and fruits also saw price drops of 15.12% and 2.65%, respectively. Protein-rich foods like eggs, meat, and fish fell by 1.09%. Wheat prices rose by 4.4%, while oil seeds surged by 9.77%, showing mixed trends within food items.
Fuel and Power Price Movements
Fuel and power prices declined by 2.43% in July. Global commodity price softness, especially mineral oils, pushed petrol prices down by 5.7% and high-speed diesel by 4.3%. This marked the 14th and 27th consecutive month of decline for these fuels. However, cooking gas prices increased by 1.23%, showing divergence within the fuel category.
Manufactured Products Price Trends
Manufactured goods prices increased by 2.05% in July. Apparel rose by 2.5%, leather by 2.57%, and non-metallic mineral products by 2.7%. Cement and plaster prices surged by 3.4%. Manufactured animal oils and fats slowed but remained high at 22.04%. Other items like food products, paper, chemicals, and pharmaceuticals saw slower price rises, indicating mixed inflationary pressures in this segment.
Economic Implications and Outlook
The deflation in July was mainly due to food price declines, even as other segments showed price increases. Experts believe WPI inflation bottomed out in July and expect it to return to positive territory in August 2025. Factors include rising food and crude oil prices, currency depreciation, and seasonal weather effects like heavy rains that may increase perishable food costs.
Relation to Retail Inflation
The WPI trends align with retail inflation data, which hit an eight-year low of 1.55% in July 2025. This was aided by falling prices of many food items despite a surge in edible oil prices, influenced by global geopolitical tensions. The moderation in inflation supports monetary policy decisions and economic planning.
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