India’s annual inflation rate based on the Wholesale Price Index (WPI) fell further into the negative zone, reaching a two-year low of (-) 0.58 per cent in July 2025, compared to the same month last year. The decline is primarily attributed to lower prices of food articles and fuels such as petrol, diesel, and natural gas, according to data released by the Commerce and Industry Ministry on Thursday.
The WPI inflation in July is also lower than the -0.13 per cent recorded in June 2025. WPI-based inflation has been easing steadily since March, after hitting a 14-month low of 0.39 per cent in May.
The food index declined by 2.15 per cent, while fuel prices, including petrol and diesel, fell by 2.43 per cent year-on-year in July, pushing the overall inflation rate into negative territory. Analysts expect this drop in wholesale prices to gradually ease retail inflation as cost savings at the bulk level are passed on to consumers, and reduced fuel prices lower transport costs.
Meanwhile, India’s inflation rate based on the Consumer Price Index (CPI) also eased further to 1.55 per cent in July, the lowest year-on-year retail inflation since June 2017. The July CPI inflation was down 55 basis points from 2.1 per cent in June 2025, which had already marked the lowest retail inflation since January 2019.
Food inflation in July turned negative at -1.76 per cent, reflecting lower prices for pulses, vegetables, cereals, eggs, and sugar. The moderation in headline and food inflation was supported by favourable base effects, reduced costs in transport, communication, education, and a mild drop in housing inflation.
The Reserve Bank of India (RBI) has projected CPI inflation at 3.1 per cent for 2025-26, citing steady monsoon progress and robust kharif sowing that are expected to keep food prices under control. RBI Governor Sanjay Malhotra recently stated, “The inflation outlook for 2025-26 has become more benign than expected. Large favourable base effects, healthy kharif sowing, adequate reservoir levels, and comfortable buffer stocks of foodgrains have contributed to this moderation.”
However, CPI inflation is likely to rise above 4 per cent by Q4 of 2025-26 due to unfavourable base effects and demand-side pressures from policy actions. Core inflation is expected to remain moderately above 4 per cent during the year, barring any major negative shocks to input prices.
-IANS