Wholesale Price Inflation Turns Negative to -0.13%  in June 2025 as Key Commodities Weaken

Mumbai, 14 July 2025: India’s Wholesale Price Index (WPI)-based inflation dipped into negative territory in June 2025, registering a year-on-year contraction of -0.13%, according to official data released by the Ministry of Commerce & Industry. This decline, the first in several months, marks a clear shift in price trends across multiple sectors, driven largely by falling costs of primary goods, energy, and food items. The downward turn from +0.39% in May and +0.85% in April underscores softening price pressures in the wholesale market.

Sharp Decline in Primary Articles Triggers Downturn in Wholesale Inflation 

The drop in inflation index was led by a substantial fall in prices of primary articles, which recorded a -3.38% year-on-year change in June, deepening from -2.02% in May. Despite a minor month-on-month increase of +0.81%, several food items witnessed significant annual deflation. Prices of onions fell by -33.49%, potatoes by -32.67%, and the overall vegetable category declined by -22.65%. Pulses also registered a notable price correction, declining by -14.09% year-on-year. These reductions reflect a combination of strong harvests, improved supply chains, and moderated consumer demand.

Fuel and Power Prices Extend Their Slide, Reducing Inflationary Pressure

Fuel and power prices continued their downward trajectory, contributing significantly to the negative inflation figure. The category saw a -2.65% year-on-year drop in June, following -2.27% in May and -3.76% in April. On a month-on-month basis, the index declined by -2.52%, largely driven by an electricity price fall of -9.10% and a -0.54% drop in mineral oils. These price adjustments were supported by reduced global energy prices and lower domestic energy consumption.

Food Price Deflation Highlights Changing Consumer Demand and Supply Balance

The WPI food index slipped to -0.26% year-on-year in June from +1.72% in May and +3.30% in April, showing a clear downward trend. While milk, cereals, and fruits continued to show mild price increases, several staples recorded substantial price drops. This trend reflects a rebalancing of supply and demand, along with government interventions aimed at stabilising food prices. The month-on-month increase of +0.37% in the food index was modest and insufficient to offset the broader annual decline.

Manufactured Products Show Resilience but Marginal Cost Adjustments Emerge

Manufactured products remained comparatively stable, with 1.97% year-on-year inflation in June, only slightly down from 2.04% in May and 2.62% in April. Month-on-month, the decline was marginal at -0.07%. The slight moderation can be traced to price reductions in basic metals (-3.14%) and rubber and plastics (-0.47%). Meanwhile, categories such as pharmaceuticals, transport equipment, and electronics witnessed mild increases, indicating selective cost firmness amidst broader input softness.

Falling Wholesale Prices Point to Demand Weakness and Softer Input Costs

The deflationary trend across the WPI reflects a combination of subdued demand conditions and easing input prices, particularly in agriculture and fuel. The month-on-month drop of -0.19% in the all-commodities index further reinforces signs of cooling economic momentum at the wholesale level. While lower prices may provide relief to manufacturers and retailers, they also raise questions about broader consumption and investment trends.

WPI Data to Play a Supporting Role in Economic Forecasting

The Wholesale Price Index, with base year 2011–12, remains a key indicator for policy planners and businesses. It tracks price trends across primary articles (22.62%), fuel and power (13.15%), and manufactured products (64.23%). Though not directly used in monetary policy decisions, the WPI helps in understanding cost dynamics affecting producers and supply chains. The next WPI update, for July 2025, will be released on 14 August 2025.

The fall in wholesale inflation is more than just a statistical shift—it offers a window into the current state of the Indian economy. On one hand, easing prices in food and fuel suggest temporary relief for businesses and consumers. On the other hand, persistent price declines in core sectors signal that demand may not be keeping pace with supply. While beneficial in the short term, extended deflation could affect industrial growth and income realisations. Policymakers will be watching closely as inflation data continues to evolve in the coming months.

REF: https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2144453

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