WPI inflation eases to 9.78%, first dip in nine months

Wholesale price inflation softened month-on-month for the first time in nine months to 9.78 per cent in July on easing in fuel and food prices.

Wholesale price index (WPI)-based inflation was 9.87 per cent in June.

This is the first time since October 2025 that WPI inflation has fallen month-on-month. The softening in July numbers is mainly on account of lower inflation in fuel and power even as inflation in primary articles and manufactured products accelerated.

“Across groups, mineral oils (containing petroleum products), food articles, manufacture of basic metals, non-food articles, manufacture of food products, and manufacture of chemicals and chemical products have been major drivers of WPI inflation in July 2026,” the commerce and industry ministry said while releasing the monthly Wholesale Price Index (WPI) data on Friday.

Wholesale inflation in fuel and power dropped to 20.05 per cent in July, as against 27.41 per cent in June.

Inflation in food articles too eased marginally to 5.44 per cent in July from 5.49 per cent in June. However, manufactured products saw an uptick in inflation at 8.29 per cent in July, as against 7.48 per cent in June.

As per the data, the output Producer Price Index (PPI) — which the Government has said will eventually replace the WPI in about 5 years — remained unchanged at 9.6 per cent YoY in July vis-a-vis June. Output PPI saw lower inflation in manufacturing and mining, but higher agriculture and electricity PPI nullified those gains.

In a research note, Barclays said the direction of the WPI has reversed and WPI inflation should soften in coming months as global prices seem to have peaked.

“In our view, WPI inflation has peaked and gradual and modest disinflation from hereon should continue, in line with relatively lower global commodity prices in general and crude oil price in particular (since June),” Barclays said.

The war in West Asia war which began on February 28 and the resultant blockade of the Strait of Hormuz, through which the majority of crude oil is imported into India, has kept WPI elevated, with pressure on global crude and fertiliser costs.

ICRA Principal Economist Rahul Agrawal said the moderation in July WPI was not broad-based and was entirely led by the fuel and power group, whereas all the other groups witnessed a hardening in their inflation prints vis-a-vis June 2026.

“Looking ahead, we anticipate a larger easing in the WPI inflation to below 9.5 per cent in August, after peaking at 9.9 per cent each during May-June 2026. Nevertheless, prints are likely to remain elevated through much of the year, with an average WPI inflation forecast of around 8.5 per cent for FY27,” Agrawal said.

The WPI data is in contrast to the retail inflation numbers released earlier this week.

The consumer price index-based retail inflation rose to 4.45 per cent in July from 4.38 per cent in June, on high food prices.

The Reserve Bank of India’s Monetary Policy Committee, earlier this month, kept benchmark policy rates unchanged at 5.25 per cent and has projected retail inflation at 5 per cent for FY27.