Daijiworld Media Network - New Delhi
New Delhi, Aug 14: India’s wholesale inflation, measured by the Wholesale Price Index (WPI), plunged deeper into negative territory in July, hitting a two-year low of -0.58% year-on-year, according to the Ministry of Commerce and Industry. The continued fall is largely attributed to declining prices of food items and key fuels like petrol, diesel, and natural gas.
This marks a sharper decline from -0.13% in June, reflecting a sustained easing trend that began in March. In May, WPI inflation had already dropped to a 14-month low of 0.39%.
Breaking down the numbers for July, the food index fell by 2.15%, while fuel and power prices dropped by 2.43% compared to the same month last year. These declines have pushed overall wholesale inflation into negative figures, suggesting a broader cooling of price pressures in the economy.
The downward trend in wholesale inflation is expected to trickle down to consumer prices, easing retail inflation as well. Lower fuel costs, for instance, help reduce transportation expenses, which in turn can lower prices of goods and services across the board.
On the consumer side, India’s Consumer Price Index (CPI)-based inflation also moderated to 1.55% in July, marking the lowest retail inflation since June 2017, as per data from the Ministry of Statistics. This is down from 2.1% in June, a level not seen since January 2019.
Food inflation, a key component of CPI, turned negative in July, recording a -1.76% decline, driven by falling prices of essential items such as pulses, vegetables, cereals, eggs, and sugar. Additionally, inflation in sectors like transport, communication, education, and housing also registered a slight decline.
The softening inflation comes as a relief for the economy, which is benefiting from a combination of favorable base effects and improving agricultural conditions. The Reserve Bank of India (RBI) has projected CPI inflation for 2025-26 at 3.1%, citing positive monsoon progress and robust kharif sowing as stabilizing factors.
RBI Governor Sanjay Malhotra recently noted, “The inflation outlook for 2025-26 appears more favorable than projected earlier. Supportive base effects, healthy reservoir levels, and adequate foodgrain stocks are helping moderate price levels.”
However, the RBI cautions that inflation may edge above 4% by the fourth quarter of 2025-26, driven by diminishing base effects and emerging demand-side pressures. Core inflation—excluding volatile food and fuel prices—is expected to remain slightly above 4% for most of the year, barring any major disruptions in input costs.
Overall, July’s data signals a period of relief for consumers and policymakers alike, but the inflation trajectory remains contingent on weather patterns, global commodity prices, and domestic demand dynamics in the months ahead.