WPI inflation falls to 25-month low on softer food prices
The reading was well below economists' expectations of a 0.30% decline in a Reuters poll.
WPI, a proxy for producers' prices, stood at -0.13% in June, 0.13% in May, 0.85% in April, 2.25% in March, 2.45% in February, and 2.51% in January. The index was pulled down primarily by cheaper primary articles, especially food.
July's decline was driven by a sharper year-on-year contraction in the food segment, down 2.15% after a 0.26% fall in June. Vegetable prices tumbled 28.96%, steeper than the 22.65% drop a month earlier, while fruit prices fell 2.65% after a 1.59% increase in June. Prices for pulses, cereals, milk, eggs, meat, and fish also softened.
'This was largely driven by the food segment, which witnessed a larger YoY contraction to the tune of 2.1% as against 0.3% in the previous month...The prints for all the other segments hardened in July 2025, as compared to June 2025,' said Rahul Agrawal, senior economist at rating agency Icra Ltd.
'Similar to the CPI, the WPI is also likely to have bottomed out in July 2025,' Agarwal said, adding Icra it to return to positive territory in August, citing rising year-on-year prints for food and crude oil, rupee depreciation, and an unfavourable base.
'Besides, heavy rains could push up perishable prices sharply in the second half of August, and remain a key monitorable,' he added.
Manufactured products, which make up nearly two-thirds of the index, rose 2.05% in July from a year earlier, slightly higher than the 1.97% increase in June.
Fuel and power prices fell 2.43%, compared with a 2.65% decline the previous month. Primary articles overall dropped 4.95% year-on-year, after a 3.38% fall in June.
Both consumer price index-based inflation and WPI have stayed subdued in recent months, aided by a good monsoon and easing food prices. This trend could persist in the short term, said Sonal Bandhan, economist at Bank of Baroda.
'Going forward, as uncertainties remain regarding US sanctions on importers of Russian oil and the status of a cease-fire deal also remain in limbo, but oil prices are noting some upward pressure,' she said.
'However, renewed tariff-related tensions are set to exert downward pressure on commodity prices as global growth prospects weaken. As a result, we expect WPI to remain contained in the coming months,' she added.
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