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CURRENT AFFAIRS
Description
India’s wholesale inflation, tracked through the Wholesale Price Index (WPI), dropped to a two-year low of -0.58% in July 2025, marking the second month in a row of negative growth. The decline was largely attributed to a sharp fall in food and fuel prices, though the cost of manufactured goods continued to rise.
Wholesale Price Index: Key Overview
The WPI is India’s primary measure of wholesale inflation, capturing price movements across a fixed basket of goods at the wholesale level. It consists of three categories:
Primary Articles (22.6%)
Fuel and Power (13.2%)
Manufactured Products (64.2%)
Together, food items under Primary Articles and Manufactured Products hold a weight of 24.4%. Major subgroups include Basic Metals, Food Products, Chemicals, and Textiles.
Food Prices: The Main Driver Of Deflation
Food prices recorded a significant slump, with primary food articles declining 6.29% in July, continuing a three-month deflationary trend.
Onion prices fell 44.4%, potatoes 41.3%, and vegetables 28.9%.
Pulses and fruits declined by 15.12% and 2.65%, respectively.
Protein-based foods like eggs, meat, and fish were down 1.09%.
However, not all items followed the trend: wheat rose 4.4%, while oilseeds surged 9.77%, reflecting mixed price movements.
Fuel And Power: Global Softness At Play
Fuel and power costs dropped 2.43% in July, influenced by weak global commodity prices.
Petrol prices declined 5.7%, while high-speed diesel was down 4.3%.
This marked the 14th straight month of decline for petrol and the 27th for diesel.
In contrast, cooking gas prices edged up 1.23%, showing uneven trends within the category.
Manufactured Goods: Inflation Persists
Unlike food and fuel, manufactured products saw a 2.05% price increase in July.
Apparel rose 2.5%, leather 2.57%, and non-metallic mineral products 2.7%.
Cement and plaster surged 3.4%.
Manufactured animal oils and fats, though moderating, remained steep at 22.04%.
Other items, including food products, paper, chemicals, and pharmaceuticals, displayed slower inflation.
Economic Impact And Outlook
Economists suggest that the July deflation is temporary, driven primarily by food price drops, and expect WPI to return to positive territory in August 2025. Factors such as rising crude oil, currency depreciation, and seasonal rains increasing perishable costs are likely to push inflation upward in the coming months.
Link With Retail Inflation
The fall in wholesale inflation mirrors retail inflation, which hit an eight-year low of 1.55% in July 2025. The drop was led by cheaper food items, though edible oils remained elevated due to global geopolitical tensions. The moderation in both wholesale and retail inflation supports monetary policy stability and economic planning.
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