India’s wholesale inflation hits near two-year low in July at -0.45%: Report

Wholesale inflation in India likely dropped to a near two-year low in July, driven by a sharp decline in food and fuel prices, according to a report by Union Bank of India. The Wholesale Price Index (WPI) is estimated to have fallen to -0.45 per cent year-on-year in July, compared to -0.13 per cent in June — the lowest level since August 2023 — indicating 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.

Food and fuel drive deflation

The report noted that the fall in WPI mirrors the movement in retail inflation (CPI), as both the food and fuel subsegments slipped deeper into deflation territory during the month. Core WPI, which excludes food and fuel, however, improved to 1.50 per cent in July from 1.06 per cent in June.

Food inflation in the wholesale market fell to -1.72 per cent year-on-year in July, down from -0.26 per cent in June. Fuel inflation also stayed in the contraction zone, easing to -4.90 per cent from -4.23 per cent in June.

The decline is partly attributed to base effects, with all sub-segments showing month-on-month increases. Deflation was particularly visible in cereals, pulses, fruits, spices, oils, and other food articles, with pulses remaining in negative territory since February 2025.

The report cautioned that global commodity prices could remain volatile amid uncertainties from fresh US trade tariffs and ongoing geopolitical conflicts. Weak demand and adequate supply may prevent a sharp rise in prices.

Weather patterns in focus

Monsoon progress and possible weather-related disruptions will remain key factors influencing supply chains and, in turn, WPI in the short term. While global markets may see renewed inflationary pressures, the report emphasised that domestic conditions will play a decisive role in shaping wholesale inflation trends in the coming months.

The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.5 per cent in its August Monetary Policy Committee (MPC) meeting, citing stable core inflation of around 4 per cent and a favourable outlook supported by good monsoon conditions.

The central bank also revised its FY26 inflation projection down to 3.1 per cent, with CPI inflation recorded at 2.1 per cent in June 2025.