India's WPI Inflation In July Likely Drops To 2-Year Low As Food Prices Decline: Report

(MENAFN- IANS) New Delhi, Aug 12 (IANS) Wholesale inflation in India likely dropped to a near two-year low in July, due to a significant decline in food and fuel prices, according to a Union Bank of India report.

The Wholesale Price Index (WPI) is estimated to have fallen to -0.45 per cent year-on-year in July, down from -0.13 per cent in June. This is the lowest level since August 2023, signalling a continued deflationary trend in wholesale prices.

"July '25 WPI YoY likely fell to almost 2 years' low of -0.45 per cent," the report said.

The report indicated that the decline in WPI reflects the trend in retail inflation (CPI), as both the food and fuel subsegments slipped deeper into deflation territory during the month. Core WPI, excluding food and fuel, however, improved to 1.50 per cent in July, up from 1.06 per cent in June.

Food inflation in the wholesale market dropped to -1.72 per cent year-on-year in July, down from -0.26 per cent in June. Fuel inflation remained in the contraction zone, decreasing to -4.90 per cent from -4.23 per cent in June.

The decline is partly due to base effects, with all sub-segments showing an increase compared to the previous month. Deflation was notable in cereals, pulses, fruits, spices, oils, and other food articles, with pulses in negative territory since February 2025.

The report warned that global commodity prices may stay volatile due to uncertainties from new US trade tariffs and ongoing geopolitical conflicts. Weak demand and adequate supply may limit any sharp upward movement in prices.

Monsoon patterns and potential weather disruptions remain key factors to watch, as they could impact the supply chain and influence WPI in the short term.

The report indicated that global market inflationary pressures may arise, but domestic conditions will be key in determining the wholesale inflation trend in the upcoming months.

The Reserve Bank of India (RBI) had maintained the repo rate at 5.5 per cent in its August Monetary Policy Committee (MPC) meeting. It cited stable core inflation at around 4 per cent and a favourable inflation outlook supported by a good monsoon for the neutral stance.

The RBI lowered its FY26 inflation projection to 3.1 per cent, with CPI inflation at 2.1 per cent in June 2025.

-- IANS

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