India's WPI inflation hits two-year low, stays negative for second month

Manufactured products, however, saw acceleration in the price in July

India’s factory gate inflation based on the wholesale price index (WPI) hit a two-year low of -0.58 per cent in July as it remained negative territory for the second month in a row on the back of decline in the food and fuel prices, according to the data released by the Ministry of Commerce and Industry on Thursday.

However, manufactured products saw acceleration in the price during the month.

 

The last time the WPI had been this low was in July 2023, when it had recorded a deflation of -1.23 per cent.

 

Primary food articles saw a deflation of 6.29 per cent in July, which was a third straight month of decline, led by the drop in the prices of onion at -44.4 per cent, potato at -41.3 per cent, vegetables at -28.9 per cent, pulses -15.12 per cent, fruits -2.65 per cent and protein-rich food items like eggs, meat and fish at -1.09 per cent.

 

 

Meanwhile, the prices for wheat saw an uptick of 4.4 per cent during the month, while prices for oil seeds soared significantly by 9.77 per cent in July.

 

Data further showed that the fuel and power prices declined 2.43 per cent in July as the low global commodity prices, especially of mineral oils, pulled the prices of petrol down by 5.7 per cent and high speed diesel by 4.3 per cent for the 14th and 27th month in a row. Cooking gas prices rose by 1.23 per cent during the month.

 

Meanwhile, the prices of manufactured products, which carry a weightage of 64 per cent in the index rose 2.05 per cent in July. This was due to acceleration in the prices of apparel by 2.5 per cent, leather by 2.57 per cent, non-metallic mineral products by 2.7 per cent and cement & plaster by 3.4 per cent. Though the prices for manufactured animal oils and fats decelerated during the month, yet they remained in double digit at 22.04 per cent.

 

The prices for other manufactured items like food products rose 6.7 per cent, paper by 0.94 per cent, chemicals by 0.22 per cent, pharmaceuticals 0.9 per cent also decelerated in July.

 

Rahul Agrawal, senior economist, ICRA Ratings said that the deflation in July was largely driven by the food segment, even as prints for all the other segments hardened in July as compared to the previous month.

 

“Similar to the CPI, the WPI is also likely to have bottomed out in July 2025. Looking ahead, ICRA expects the headline WPI to re-enter the inflationary territory in August 2025 after a gap of two months, amid the hardening in Y-o-Y prints for food and crude oil so far, depreciation in the USD/INR pair, as well as 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.

 

The drop in WPI inflation comes days after data showed that India’s retail inflation moderated to an eight-year low of 1.55 per cent in July, aided by a deepening deflation in several food items even as prices of edible oils surged at a pace not seen since the onset of the Russia-Ukraine conflict in early 2022.