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India’s WPI inflation cooled to 0.39% in May, down from 0.85% in April, the third straight month of decline, as food and fuel prices softened.
The deets: the drop was driven by easing prices in food, fuel, and manufactured products.
- Primary food articles saw a decline of -1.56%, the second month in a row.
- Vegetable prices fell -21.6%, hitting a 28-month low.
- Other big movers included potato which came in at -29.4%, onion at -14.4%, pulses at -10.4%, eggs, meat & fish at -1.01%.
- Prices in the cereals basket rose, but at a slower pace
- Fuel & power prices dropped -2.27% in May
On the flip side, some food prices ticked up with fruits rising 10.17% & milk 2.66%
Zoom out: the sharp dip in WPI inflation follows a similar trend in retail inflation, which dropped to a 75-month low of 2.82% in May, thanks to a steep fall in vegetable and pulses prices.
This signals a broad-based cooling in price pressures across both wholesale and consumer levels especially in essential food items.
Big theme: with inflation softening across the board, the RBI now has greater room to ease monetary policy. So far in 2025, it has cut the repo rate by 100 basis points, bringing it down to 5.5%, with the most recent being a 50 bps cut in June. This steady decline in inflation could support borrowing, spending, and overall economic growth in the months ahead.
