In June 2025, the country witnessed a significant decrease in the wholesale inflation rate. According to the latest figures released by the government on July 14th, the Wholesale Price Index (WPI) for June was recorded at just 0.13 percent. This figure represents the lowest level since October 2023. In May 2025, the rate was 0.39 percent, indicating a sharp decline of 26 basis points in the inflation rate within a single month.
Softening of Prices in Petroleum and Metals
The government attributes this decline primarily to the softening of prices in crude oil, natural gas, mineral oil, and basic metals. The reduction in their prices has lowered production costs, thereby providing relief in the prices of manufactured goods as well.
Relief in Vegetables and Pulses
A decrease in the prices of food items was also recorded. In June, the inflation rate for vegetables decreased to 22.65 percent, although it remains at a high level. The inflation rate for onions reached 33.49 percent in June, up from 14.41 percent in May. On the other hand, there was a significant decline in potato prices. Potatoes became cheaper by 32.67 percent in June, compared to 29.42 percent in May. There was also a softening in the prices of pulses. The inflation rate for pulses was 22.65 percent in June, compared to 10.41 percent in May. The inflation rate for cereals was recorded at 3.75 percent, up from 2.56 percent in May.
Significant Drop in Fuel and Electricity Rates
Relief was also seen in the fuel and electricity category. The inflation rate for this category was 2.65 percent in June, whereas it was 22.27 percent in May. This means that there was a b decline in the prices of petrol, diesel, and electricity, providing significant relief to the general public.
Stagnation in Prices of Manufactured Goods
Manufactured products constitute the largest portion of the WPI, contributing about 60 percent. The inflation rate for these goods was 1.97 percent in June, which is slightly lower than the previous month. This indicates that the prices of products have stabilized due to a decrease in costs in the manufacturing sector.
Decline in Prices of Primary Goods
The prices of primary goods such as fresh fruits, vegetables, milk, eggs, meat, and fish also decreased in June. The inflation rate for this category was 3.38 percent in June, while it was 2.02 percent in May. These figures indicate that essential commodities have become cheaper.
Reserve Bank Had Already Predicted
The Reserve Bank of India (RBI) had predicted in its Monetary Policy Committee meeting in April that the inflation rate could decrease in the coming months. The softening of food prices was cited as the main reason for this. The RBI has set the inflation forecast for the fiscal year 2025-26 at 4 percent, down from the previous 4.2 percent.
Impact of Falling Inflation on the Market
The decline in inflation has also been reflected in the stock and currency markets. It is expected that interest rates will stabilize, which has strengthened investor confidence. Due to this, a positive trend has also been seen in the domestic stock market, and the rupee has also strengthened slightly against the dollar.
The figures released by the government show that relief is being provided on the price front and this trend could continue in the coming months, especially if the prices of food items and fuel remain under control.
