WPI Inflation Remains in Negative Zone for Second Straight Month in July 2025

India’s Wholesale Price Index (WPI)-based inflation remained in the negative zone for the second month in a row, standing at –0.58% in July 2025 on a year-on-year basis. This continued deflation at the wholesale level points to a cooling trend in input prices across key sectors such as food, energy, and metals.

According to the Ministry of Commerce and Industry, the main contributors to the decline were lower prices of food articles, mineral oils, crude petroleum, natural gas, and basic metal products.

Key Drivers of Wholesale Deflation in July 2025

1. Food Prices See Sharp Decline

The WPI Food Index registered a –2.15% inflation rate, driven by reduced prices in,

• Vegetables and cereals
• Edible oils and pulses
• Perishable goods like onions and tomatoes

This mirrors trends seen in retail inflation, which also dipped significantly in July due to surplus supply and seasonal price corrections.

2. Primary Articles Fall Further

Deflation in primary articles deepened to –4.95%, reflecting weakness in,

• Agricultural output prices
• Minerals and forest produce

3. Fuel and Power Segment in Deflation

With international oil prices stabilizing and domestic demand moderate, the fuel and power index recorded –2.43% inflation, continuing the deflationary pressure in the energy sector.

Manufactured Goods Show Mild Inflation

In contrast to other segments, inflation in manufactured products edged up to 2.05%, indicating,

• Input cost recovery in certain sectors
• Marginal improvement in industrial pricing power
• Stable demand in consumer durables and capital goods
• This divergence suggests that wholesale deflation is not broad-based, but concentrated in primary and energy-linked commodities.

WPI vs CPI: Understanding the Difference

The WPI measures average changes in prices at the wholesale level, reflecting the cost of goods sold in bulk before they reach consumers. In contrast, the Consumer Price Index (CPI) tracks the cost of goods and services at the retail level.

• WPI (July 2025): –0.58%
• CPI (July 2025): 1.55%, lowest in 8 years

The parallel decline in both indicators suggests widespread price moderation across the economy, which could influence future monetary policy moves.

Economic Implications

Positive Aspects

• Eases input cost burden on industries
• Supports consumer affordability
• May allow the RBI to maintain an accommodative stance on interest rates

Concerns

• Persistent deflation may weigh on producer margins
• Signals softening demand in certain sectors
• Could dampen rural incomes if food price deflation continues