WPI inflation stays negative for 2nd month in July as food, fuel prices dip

Business Standard

2 days ago

India's factory-gate inflation, based on the wholesale price index (WPI), fell to a two-year low of -0.58 per cent in July, staying in negative territory for the second consecutive month on the back of falling food and fuel prices, according to data released by the Ministry of Commerce and Industry on Thursday. Manufactured products, however, saw faster price increases during the month.
The last time the WPI was this low was in July 2023, when it recorded deflation of -1.23 per cent.
Data showed that prices of primary food articles (-6.3 per cent) fell for the third straight month, led by sharp declines in onion (-44.4 per cent), potato (-41.3 per cent), vegetables (-28.9 per cent), pulses (-15.12 per cent), fruits (-2.65 per cent), and protein-rich items like eggs, meat, and fish (-1.09 per cent). Wheat prices rose 4.4 per cent, while oilseeds saw a significant spike of 9.77 per cent.
Fuel and power prices declined 2.43 per cent in July as lower global commodity prices, especially for mineral oils, kept petrol (-5.7 per cent) and high-speed diesel (-4.3 per cent) in deflation for the 14th and 27th consecutive month, respectively. Cooking gas prices, however, increased 1.23 per cent.
Prices of manufactured products—which carry a 64 per cent weight in the index—rose 2.05 per cent in July, driven by apparel (2.5 per cent), leather (2.57 per cent), non-metallic mineral products (2.7 per cent), and cement and plaster (3.4 per cent). While price growth for manufactured animal oils and fats slowed, it remained in double digits at 22.04 per cent. Price increases for other manufactured items such as food products (6.7 per cent), paper (0.94 per cent), chemicals (0.22 per cent), and pharmaceuticals (0.9 per cent) also eased.
Rahul Agrawal, Senior Economist at ICRA Ratings, said the July deflation was largely driven by the food segment, even as prices in all other categories firmed compared to the previous month. 'Similar to the CPI, the WPI is also likely to have bottomed out in July 2025. Looking ahead, we expect the headline WPI to re-enter inflationary territory in August after a gap of two months, amid hardening food and crude oil prices, rupee depreciation, and an unfavourable base. Heavy rains could push up perishable prices sharply in the second half of August, and this will be a key monitorable,' he said.
The fall in WPI inflation comes days after India's retail inflation eased to an eight-year low of 1.55 per cent in July, helped by deeper deflation in several food categories even as edible oil prices surged at their fastest pace since the start of the Russia–Ukraine conflict in early 2022.