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India's wholesale inflation slipped back into the negative zone this past month after remaining positive in May. The Wholesale Price Index (WPI) fell to (-) 0.13%, influenced by declining prices in food articles, mineral oils, and basic metals. This marks a renewed phase of deflation, reminiscent of April 2023 and July 2020, when WPI similarly dipped below zero. Retail inflation, too, continued its downward trend, hitting a six-year low in May and staying well within the Reserve Bank of India's comfort range. With inflation stabilising, the Central Bank is expected to maintain focus on growth-friendly policies.
India's wholesale inflation, as measured by the Wholesale Price Index (WPI), turned negative this past month at (-) 0.13%, reversing its upward trend from May, which had recorded a 0.39% rise. Data released by the Ministry of Commerce and Industry highlighted a dip in prices across key sectors particularly food articles, mineral oils, and the manufacture of basic metals, as well as crude petroleum and natural gas as the main contributors to this decline. Advertisement
This re-entry into negative inflation territory is not entirely new for India. A similar trend was observed in April 2023 and earlier during the COVID-19 pandemic in July 2020. Back in 2023, WPI inflation had remained negative for seven consecutive months, marking a notable shift from the 18-month-long streak of double-digit inflation that lasted until September 2022.
The Department for Promotion of Industry and Internal Trade (DPIIT) issues the WPI figures monthly, typically on the 14th or the next working day, with a two-week lag from the reference month. This index is based on data sourced from select manufacturing units and institutional entities across the country.
Parallel to the wholesale price movement, consumer price inflation also continued its easing pattern. The year-on-year Consumer Price Index (CPI) for May was recorded at 2.82% the lowest since February 2019. This marks a 34 basis point drop from April, offering some relief to households coping with cost-of-living pressures. The retail inflation data for June is expected to be released later today.
Since October 2024, CPI inflation has stayed within the Reserve Bank of India's prescribed range of 2% to 6%, after breaching the upper band that month. With inflation largely under control, the RBI has maintained a cautious approach. It held the benchmark repo rate at 6.5% for eleven consecutive policy reviews before finally easing it by 50 basis points in February 2025 the first rate cut in nearly five years.
The central bank has since revised its inflation forecast for the current financial year downward from 4% to 3.7%, signalling confidence in India's macroeconomic stability. Analysts believe this sets the stage for growth-centric monetary policies going forward, as price pressures remain in check.
Source ANI
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