WPI Inflation In May At 0.39%,14 Month-Low Due To Food, Fuel Costs Deflation; Expert Warns At Potential Risks

The wholesale price index-based inflation (WPI inflation) in India dipped to a 14-month low in May, coming in at 0.39%. Cooling down costs of food, fuel, and primary articles were among the top contributors to the WPI-based inflation, also known as headline inflation, according to data released by the Ministry of Commerce & Industry on Monday, June 16.

Higher costs in food manufacturing, electricity, food products, electricity, other manufacturing, chemicals and chemical products, manufacture of other transport equipment and non-food articles, and other sectors also impacted the WPI-linked inflation in May 2025.

WPI Inflation: Segment-Wise Inflation In May

Inflation in primary articles came in negative at 2.02% in the month of May against -1.44% in April, 2025. Similarly, fuel inflation also declined last month. Inflation in the segment declined to -2.27% in May, against -2.18 in April this year. Inflation in the manufacturing sector also declined from 2.62% to 2.04% monthly in May.

Manufactured products maintained their index at 144.9 in May 2025. Among the 22 NIC two-digit groups, ten experienced price increases, nine saw decreases, and three remained unchanged. Notable price hikes were seen in other manufacturing sectors, including pharmaceuticals and textiles.

Food Inflation

The Food Index rose from 189.3 in April to 189.5 in May 2025. In contrast to the increase in the index, the inflation rate in the segment declined from 2.55% to 1.72%. Month-over-month changes show a slight decline of 0.06% in the overall WPI from April to May.
Examining the month-over-month changes for major groups reveals that primary articles saw a minor decrease of 0.05%. Fuel and power experienced a more significant drop of 0.95%, while manufactured products remained stable with no change from April to May.

When Will WPI Inflation For June Be Released?

The Ministry plans to release June's WPI data on July 14, continuing its monthly updates on India's wholesale pricing trends. This regular dissemination helps track economic shifts effectively.
The final WPI for March 2025 was recorded at 154.8 with an inflation rate of 2.25%. The provisional figures for May are compiled with an impressive response rate of nearly 90%, ensuring accuracy in reporting.

The WPI data is crucial for understanding economic conditions as it reflects price movements across various sectors like food products, chemicals, and transport equipment manufacturing.

Stability in Manufacturing Sector

The manufacturing products sector remained stable with no major changes in index value from April to May. Within this sector, some groups like pharmaceuticals saw price increases, while others like basic metals experienced declines. In the primary articles category, food articles increased slightly by 0.56%, whereas minerals dropped significantly by over seven percent compared to April's figures.

WPI Inflation Came Below Expectations

Calling the recent WPI inflation numbers as 'below expectations', Rajani Sinha, Chief Economist, CareEdge Ratings, called it the lowest since April 2024. Sinha highlighted that the numbers declined due to deflation in the fuel and power category as well as in primary goods.
"The outlook for food inflation has improved considerably. Positive indicators such as favorable prospects for agricultural production, recent reductions in basic customs duties on edible oils, and adequate reservoir levels are expected to keep food prices in check," noted Sinha.

While acknowledging the positive sentiment around above-normal monsoon, Sinha mentioned that the spatial and temporal distribution of monsoon rainfall will impact the growth of agricultural activities during the season.

"The spatial and temporal distribution of monsoon rainfall will be crucial-especially considering the ~31% cumulative rainfall deficit observed so far. Although the monsoon arrived early, its progress has slowed. That said, it remains early in the season, and a recovery in rainfall activity remains possible. Weather-related risks will require close monitoring."

Shedding light on risks at global front, Sinha added, "Industrial metal prices have softened amid mounting concerns over global economic growth, exacerbated by an escalation in tariff tensions. The imposition of new U.S. tariffs on steel and aluminium has intensified fears of a supply glut, particularly due to continued oversupply from China. Conversely, Brent crude oil prices have surged-up approximately 16% since the end of May-amid renewed geopolitical tensions in the Middle East. These developments warrant careful observation, as they pose potential risks to global commodity markets and supply chains."