India’s wholesale price inflation (WPI) declined to 0.39 percent in May 2025, according to the latest data released by the Ministry of Commerce and Industry on Monday, June 16, 2025. The decline was primarily driven by deflation in food articles, notably vegetables, and easing prices of fuel and manufactured goods.

This is a notable drop from 0.85 percent in April 2025, and a significant fall when compared to the 2.74 percent inflation rate recorded in May 2024.

Sharp deflation in food and fuel

According to the official Wholesale Price Index (WPI) data, food articles recorded a deflation of 1.56 percent in May, deeper than the 0.86 percent deflation in April. Within the food category, vegetables saw a steep deflation of 21.62 percent, up from 18.26 percent in April. This was a key factor in pulling down the overall WPI figure.

The fuel and power segment also recorded deflation of 2.27 percent, reversing the positive inflation of 2.18 percent seen in April. Falling global oil prices and subdued domestic demand contributed to the decline.

Mixed trends in manufactured products

The manufactured products category, which makes up a substantial portion of the WPI basket, saw moderated inflation at 2.04 percent in May, compared to 2.62 percent in April. While prices of chemicals, transport equipment, and non-food articles continued to rise, the pace of increase slowed.

The Ministry of Industry noted that positive inflation in May was largely due to higher prices in specific sectors like manufacture of food products, electricity, chemicals, and other transport equipment.

WPI vs CPI inflation trends

The WPI is one of the two primary inflation indicators used in India, the other being the Consumer Price Index (CPI), also known as retail inflation. The Reserve Bank of India (RBI) gives more weight to CPI while framing monetary policy.

According to data released last week, retail inflation dropped to 2.82 percent in May 2025, marking a six-year low. This decline was also attributed to subdued food prices, echoing the WPI trend.

RBI responds with policy rate cut

Given the consistent fall in inflation, the RBI announced a 0.50 percent cut in the benchmark policy interest rate, bringing it down to 5.50 percent earlier this month. This move is expected to boost credit growth, support economic recovery, and stabilise demand.

RBI Governor Shaktikanta Das said in a recent press briefing that the central bank was committed to ensuring price stability while supporting growth, and would take further calibrated steps if required.

Outlook for the coming months

Economists say that while the decline in WPI inflation is a positive signal, further moderation would depend on monsoon performance, global commodity prices, and domestic demand recovery.

A good monsoon could bring additional relief to food prices, while any spike in global crude oil prices may reverse the current deflationary trend in fuel. Core inflation in manufactured goods remains mildly elevated, indicating input cost pressures still persist in some sectors.

Conclusion

The sharp drop in wholesale inflation in May 2025 suggests that price pressures in the economy are easing, driven largely by vegetable deflation and cooling fuel prices. Alongside falling retail inflation, it has given the RBI more room for policy easing.

The key challenge now will be to sustain disinflation without hurting the growth momentum, especially as India navigates global uncertainties and domestic supply chain dynamics. The data from the upcoming months will be critical to gauge whether disinflation becomes a durable trend.

Disclaimer

This article is for educational and informational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance and consultation with SEBI-registered advisors. Market conditions are volatile and subject to change. Neither the author nor the platform is responsible for losses arising from use of this information.

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