WPI remains negative for second month in row on softer food prices

Wholesale price inflation (WPI) stood at (-)0.58% in July, marking the second consecutive month of deflation at the wholesale level this year, according to data released by the commerce ministry on Thursday.

In comparison, WPI inflation stood at (-)0.13% in June and 2.10% in the same month last year.

The release comes just two days after the Ministry of Statistics and Program Implementation (MoSPI) reported that retail inflation, measured by the Consumer Price Index (CPI), softened to an eight-year low of 1.55% in July from 2.10% in June, marking a fall of 55 basis points.

“Negative rate of inflation in July 2025 is primarily due to decrease in prices of food articles, mineral oils, crude petroleum & natural gas, manufacture of basic metals etc,” the ministry stated in a press release.

Food articles recorded a sharp deflation of 6.29% in July, compared with 3.75% in June, led by vegetables, where prices plunged 28.96% versus 22.65% a month earlier. Fuel and power prices also remained in negative territory, with deflation at 2.43% in July against 2.65% in June.

“The year-on-year (YoY) deflation in the WPI expectedly widened to 0.6% in July 2025 from 0.1% in June 2025, printing largely in line with ICRA’s expectation (-0.4%). This was largely driven by the food segment, that witnessed a larger YoY contraction to the tune of 2.1% as against 0.3% in the previous month, led by vegetables, pulses, and eggs, meat & fish. The prints for all the other segments hardened in July 2025 as compared to June 2025,” said Rahul Agrawal, Senior Economist, ICRA Ltd in a statement.

In contrast, manufactured products saw inflation rise to 2.05% in July from 1.97% in June, though the overall index for the category eased 0.14% month-on-month. Of the 22 product groups, prices rose in nine, fell in nine and remained unchanged in four.

Among major groups, the Primary Articles index rose 1.18% in July on higher prices of crude petroleum, natural gas, and non-food articles, while minerals declined. The Fuel & Power index gained 1.12% as mineral oils turned costlier, though coal and electricity registered a fall.

“ICRA expects the headline WPI to re-enter the inflationary territory in August 2025 after a gap of two months, amid the hardening in YoY prints for food and crude oil so far, depreciation in the USD/INR pair, as well as an unfavourable base. Besides, heavy rains could push up perishable prices sharply in the second half of August and remain a key monitorable,” Agrawal added.

ICRA expected WPI inflation to average out at almost 1% this fiscal year, with retail inflation at 3-3.2%, taking the nominal GDP growth forecast to 8% during this year, slightly lower than 9.8% of FY25.