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| India’s WPI inflation eases to 0.13% in September 2025, driven by falling food and fuel prices—signaling potential rate cuts by the RBI.(Representing AI image) |
Easing Pressures: Why India’s Wholesale Inflation Cooling to 0.13% in September Is a Big Deal
- Dr.Sanjaykumar pawar
Table of Contents
- Introduction: Why Wholesale Inflation Matters
- What Is WPI and How It Differs from CPI
- Snapshot: September 2025 Wholesale Inflation
- Dissecting the Drivers: Food, Fuel, and Manufactured Goods
- The Data Speaks: Trends, Comparisons, and Surprises
- Implications for Monetary Policy & Growth
- Risks and Caveats Ahead
- My Take & Strategic Insights
- Frequently Asked Questions (FAQ)
- Conclusion
- References & Further Reading
1. Introduction: Why Wholesale Inflation Matters
In October 2025, India’s latest Wholesale Price Index (WPI) data made headlines: wholesale inflation slowed to just 0.13% year-on-year in September. For a large, developing economy like India—where prices of food, fuel, and raw materials often fluctuate—this near-zero inflation is a striking shift.
Why does wholesale inflation matter? The WPI tracks price changes at the producer level, before goods reach consumers. When WPI rises, it signals higher input costs for manufacturers and suppliers. Conversely, when it slows—as we’ve seen now—it suggests that cost pressures are easing across supply chains.
This matters for several reasons. For businesses, lower input costs can protect or even improve profit margins. For consumers, it may mean that retail prices won’t rise as quickly—or could even drop in some sectors. And for policymakers, especially the Reserve Bank of India (RBI), low wholesale inflation could create room to lower interest rates, supporting broader economic growth.
However, this data point is just one piece of the puzzle. A 0.13% inflation rate prompts deeper questions: What’s driving this decline? How does it compare with Consumer Price Index (CPI) inflation? Is this a temporary dip or the start of a longer trend?
In this analysis, we’ll break down how WPI is calculated, explore sector-specific drivers behind the drop, compare WPI to other inflation measures, and discuss what this means for businesses, investors, and everyday Indians.
Understanding wholesale inflation isn't just for economists—it's a vital lens into the health of the economy. And with such a low reading, it's time to look closer at what’s really going on beneath the surface.
2. What Is WPI and How It Differs from CPI
Understanding the difference between the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) is essential to grasp how inflation affects different parts of the economy. Both indices measure inflation, but they do so from different vantage points—one looking at producer prices and the other focusing on what consumers pay. Let’s break down what WPI really is, how it contrasts with CPI, and why both are important when analyzing the inflation landscape in India.
2.1 Defining Wholesale Price Index (WPI)
The Wholesale Price Index (WPI) measures the average change in prices of goods at the wholesale or producer level, before they reach end consumers. In simpler terms, it reflects what manufacturers and wholesalers pay for raw materials, fuel, and finished goods.
In India, the WPI is compiled and published monthly by the Ministry of Commerce & Industry. The index includes three key categories:
- Primary Articles – Agricultural products like cereals, fruits, vegetables, and minerals
- Fuel and Power – Crude petroleum, coal, electricity
- Manufactured Products – Textiles, chemicals, metals, machinery, etc.
Each of these components is assigned a weight in the overall index. Manufactured products hold the highest weight, followed by primary articles and fuel. This structure means WPI is heavily influenced by changes in commodity and energy prices.
Because it captures price trends at the production and wholesale level, WPI acts as an early indicator of inflationary trends in the supply chain—before they potentially reach consumers.
2.2 Contrast: WPI vs. CPI
While WPI focuses on wholesale prices, the Consumer Price Index (CPI) is all about what consumers actually pay for goods and services. This makes CPI a more direct measure of cost of living and inflation felt by households.
Here are the key differences:
- Scope: CPI includes a wide range of goods and services (like healthcare, education, transport, housing). WPI, in contrast, does not include services.
- Use in Policy: The Reserve Bank of India (RBI) primarily uses CPI inflation to guide monetary policy decisions, such as setting interest rates.
- Supply Chain Position: WPI is considered an upstream indicator, tracking the price movement of raw materials and wholesale goods. CPI is a downstream indicator, showing final prices paid by consumers.
Because WPI reflects input costs, a drop in WPI often signals easing inflationary pressures in the production pipeline. This can, over time, lead to lower CPI—though the relationship isn't always direct due to other variables like taxes, transportation costs, and retail markups.
2.3 Strengths & Limitations
Understanding the strengths and limitations of WPI helps in using it effectively as a macroeconomic tool.
Strengths of WPI:
- Early Warning System: WPI can flag inflation or deflation early by tracking raw material and intermediate goods.
- Commodity-Sensitive: It's particularly useful in economies like India’s, where global commodity prices (especially fuel and metals) have a significant impact on inflation.
- Global Relevance: WPI often aligns more closely with international price trends, making it helpful for trade and policy analysis.
Limitations of WPI:
- Excludes Services: A major drawback—services form over 50% of India’s GDP, and not accounting for them limits WPI’s relevance in capturing full inflation.
- Lag in Consumer Impact: Not all wholesale price changes reach consumers. Retail margins, logistics, and local demand factors can absorb or amplify changes.
- Volatility & Seasonality: Prices of primary articles (like vegetables or pulses) are highly seasonal, which can distort monthly readings and lead to misleading signals.
while WPI is a crucial metric for assessing inflationary trends in production and trade sectors, it doesn’t tell the whole story. For a holistic view of inflation in India, WPI must be interpreted alongside CPI, input-output trends, and broader economic indicators. That’s especially true in a complex, consumption-driven economy like India’s, where what producers pay and what consumers experience don’t always move in sync.
3. Snapshot: September 2025 Wholesale Inflation
Let’s set the scene with the key metrics:
| Metric | Value (Sep 2025 YoY) | Previous (Aug 2025) | Notes |
|---|---|---|---|
| WPI Inflation | 0.13 % | 0.52 % | Much lower than most forecasts |
| Food Articles | –1.99 % | +0.21 % | Deflation in food key driver |
| Primary Articles | –3.32 % | –2.10 % | Broad fall in raw materials |
| Fuel & Power | –2.58 % | –3.17 % | Continued deflation in energy inputs |
| Manufactured Goods | +2.33 % | +2.55 % | Still positive but easing |
Key takeaways:
- The modest positive headline inflation is due mainly to manufactured goods, while most raw inputs and food segments saw deflation.
- Vegetable prices saw a steep drop: –24.41 % YoY
- Electricity was one rare component to inch upward: +1.20 %
- On a month-on-month basis, wholesale prices fell 0.19 % from August to September
In short: supply-side easing (especially in food and energy) played a strong role in dragging down the aggregate.
4. Dissecting the Drivers: Food, Fuel, and Manufactured Goodsll
To truly understand why wholesale inflation in India slowed to just 0.13% in September 2025, it’s crucial to break down the performance of its key segments: food and primary articles, fuel and power, and manufactured goods. Each sector tells a unique story about price dynamics and supply-demand conditions shaping the overall WPI trend.
4.1 Food & Primary Articles
The most striking contributor to the slowdown in wholesale inflation is the food articles segment. In September, the food articles index recorded a significant decline of –1.99%, reversing from a mild inflation of 0.21% in August. This negative turn is primarily driven by sharp price drops in several key staples:
- Vegetables plunged by a massive –24.41%, reflecting seasonal abundance and improved supply.
- Pulses fell by –17.19%, easing from the high prices earlier in the year.
- Potato prices collapsed by –42.24%, and onions tumbled an astonishing –63.79%, both benefiting from good harvests and possibly controlled inventory release by authorities.
- Even cereals and paddy showed notable price declines, signaling broader softness in agricultural commodities.
This deflation in food items is often seasonal but also signals improved crop yields and possibly a cooling in demand compared to previous months. The combination of a good harvest cycle and supply chain normalization has alleviated some of the inflationary pressures seen earlier.
Looking beyond food, the wider primary articles category—which includes agricultural products, minerals, and raw materials—registered an even deeper deflation at –3.32%, down from –2.10% in August. This reinforces the view that at the earliest stage of the supply chain, prices are firmly under downward pressure.
4.2 Fuel & Power
Energy prices significantly influence wholesale inflation because fuel and power costs feed directly into production and transportation expenses. In September, the fuel & power segment posted a deflation of –2.58%, slightly less negative than August’s –3.17%, but still indicating lower price pressure.
Despite the overall downward trend, some sub-categories bucked the deflationary tide. Notably, electricity prices increased by 1.20%, possibly due to seasonal demand changes or tariff revisions.
The broader fuel and power deflation points to a few factors: reduced international crude oil prices, weakened domestic demand, or improved supply conditions in the energy sector. These lower energy costs help ease input costs for businesses across industries.
4.3 Manufactured Goods
The manufactured goods sector is a major driver of wholesale inflation because it accounts for the largest share in the WPI basket. Unlike food and fuel, this segment continued to show positive inflation, but with signs of moderation.
In September, manufactured goods inflation eased to 2.33% from 2.55% in August. This slower pace of price rise reflects ongoing cost pressures related to labor, intermediate inputs, and logistics, which tend to be stickier and adjust more gradually.
However, the moderation suggests that the easing costs in food and energy are starting to flow through the supply chain and partially ease pressures on manufacturers. This could eventually lead to softer price increases at the wholesale level.
The sharp deflation in food and primary articles, coupled with falling fuel and power prices, is the primary force dragging wholesale inflation lower. Meanwhile, the manufactured goods sector, which has more entrenched cost structures, is cushioning the overall decline by maintaining moderate inflation. Understanding these sectoral movements offers deeper insight into why India’s wholesale inflation hit such a low level in September and what it could mean for prices and policy ahead.
5. The Data Speaks: Trends, Comparisons, and Surprises ll
Analyzing wholesale inflation numbers in isolation can miss the full story. To truly understand what India’s 0.13% WPI inflation in September 2025 means, it’s essential to put the data in context—comparing year-on-year trends, linking wholesale prices to retail inflation, and uncovering surprising sector-specific shifts. Let’s dive into what the numbers reveal and why they matter.
5.1 Year-on-Year Comparisons & Historical Perspective
September 2025’s 0.13% WPI inflation marks a striking drop from the 1.91% recorded in September 2024—a massive slowdown in wholesale price pressures within just one year. Even more notable is that most forecasts had pegged wholesale inflation at around 0.50% for this period, meaning the actual data came in well below expectations.
This sharp slide reflects how volatile components like food and energy continue to sway wholesale inflation dramatically. For instance, a bumper harvest or a fall in global fuel prices can quickly dampen inflation numbers, while shortages or supply disruptions can push prices sharply higher.
Historically, India’s WPI is known to fluctuate between inflationary and deflationary periods. This pattern largely results from commodity price cycles and seasonal factors influencing agricultural outputs. Charts from the past decade illustrate this volatility—underlining that low inflation months like September 2025 are part of broader cycles rather than isolated incidents.
Understanding this ebb and flow is crucial because it helps policymakers, businesses, and consumers anticipate and respond to inflation trends rather than react to short-term blips.
5.2 Relationship with CPI (Retail Inflation)
The wholesale inflation slowdown is mirrored by trends in retail inflation. In September 2025, CPI inflation dropped to 1.54%, marking its lowest point in over eight years. This simultaneous easing in consumer prices indicates that the decline in wholesale costs is gradually filtering through the supply chain and reaching end consumers.
However, there’s an important caveat: core inflation—which excludes volatile food and energy prices—remained stubbornly high, hovering around 4.5% according to various reports. This signals that while food and fuel prices are easing, inflationary pressures in sectors like housing, healthcare, and transport continue to persist.
For the Reserve Bank of India (RBI), this dual picture offers some policy flexibility. Lower headline inflation numbers provide room to consider easing monetary policy, potentially through interest rate cuts. But the elevated core inflation warns against over-aggressive moves, as underlying price pressures remain.
5.3 Surprise Elements
Beyond headline numbers, some surprising sectoral movements highlight the complexity of India’s inflation landscape:
- The vegetable price plunge of –24.41% stands out as exceptionally sharp. While India’s food markets are known for volatility, such a steep drop signals either abundant supply, lower demand, or both.
- In contrast, electricity prices rose by 1.20%, bucking the overall trend of deflation. This increase points to possible supply constraints or rising production costs in the power sector, underscoring uneven inflation dynamics.
- Despite broad-based easing, manufactured goods inflation remained positive, suggesting persistent cost pressures or pricing rigidity in industrial sectors.
These nuances remind us that inflation is not uniform across the economy. Half the story lies in the “where” and “why”—which sectors are driving changes, and what underlying factors are at play.
The September 2025 WPI data reveals a complex inflation environment marked by easing wholesale and retail price pressures but also pockets of resistance. By examining historical trends, cross-referencing CPI data, and unpacking sector-specific surprises, we gain a richer understanding of India’s inflation trajectory—knowledge that is vital for policymakers, businesses, and consumers alike.
6. Implications for Monetary Policy & Growth
India’s recent slowdown in wholesale inflation opens up several important avenues for the economy, particularly in the realms of monetary policy and overall growth. Understanding these implications helps us see how lower inflation can shape decisions by the Reserve Bank of India (RBI), businesses, consumers, and the government. Let’s dive deeper into these dynamics.
6.1 Room for Rate Cuts
One of the most immediate and significant impacts of eased inflation is the potential room it creates for the RBI to cut interest rates. The central bank’s primary goal is to maintain price stability, targeting CPI inflation between 2% and 6%. With inflation running comfortably within or even below this band, and wholesale price pressures moderating to just 0.13% year-on-year, the RBI gains flexibility.
Lower inflation reduces the urgency to keep rates high to tame price rises. This breathing space is critical, especially if economic growth is sluggish or slowing. In fact, market analysts and economists are already speculating about possible rate cuts in upcoming monetary policy reviews. Such cuts could stimulate borrowing and investment, helping the economy regain momentum.
However, the RBI’s decision will hinge not only on inflation data but also on growth signals, global economic trends, and financial stability concerns. It’s a delicate balancing act—easing too soon risks igniting inflation again, while waiting too long could stifle growth.
6.2 Corporate Margins & Investment
Eased wholesale inflation translates directly into lower input costs for businesses, especially in sectors heavily reliant on food, fuel, and raw materials. This relief helps companies maintain or even improve their profit margins without pushing higher prices onto consumers.
When input costs stabilize or fall, companies face less pricing pressure, reducing the risk of a cost-push inflation spiral—where rising costs force continuous price increases. This stability is particularly beneficial for capital-intensive industries like manufacturing, infrastructure, and energy, which have large upfront expenses.
With improved margins and cost predictability, firms are likely to feel more confident in investing and expanding operations. Increased business investment can generate jobs and support broader economic growth.
6.3 Consumer Demand & Purchasing Power
Consumers stand to benefit if wholesale inflation easing filters through to retail prices. When prices for essentials—particularly food and fuel—stabilize or drop, household budgets feel less pressure, which can boost purchasing power.
This modest relief can encourage greater spending, especially on discretionary items such as electronics, clothing, and entertainment. Stronger consumer demand supports sectors sensitive to cyclical changes and helps sustain economic growth.
However, the pass-through from wholesale to retail prices is not always immediate or complete. Factors such as supply chain costs, taxes, and retailer margins influence how much consumers actually feel the change.
6.4 Fiscal Leeway & Subsidy Burden
Lower inflation also benefits government finances. High inflation often forces governments to increase price subsidies on essentials like fuel, food, and fertilizers to protect vulnerable populations.
With inflation easing, the government’s subsidy burden reduces, freeing up fiscal space. This allows policymakers to redirect funds toward critical areas like infrastructure development, health care, education, or social welfare programs. Increased public investment in these areas can foster long-term sustainable growth.
6.5 Growth vs. Disinflation Trade-off
While lower inflation is generally positive, there is a cautionary note. If the RBI cuts rates too aggressively in a weak demand environment, it risks triggering inflation surprises down the road. Rapidly loosening monetary policy could also inflate asset prices, creating bubbles in real estate, stocks, or credit markets.
Therefore, the RBI must calibrate its policy carefully, balancing the need to support growth with the risk of rekindling inflation or financial instability. Prudent, data-driven policy adjustments will be key to navigating this trade-off successfully.
The recent slowdown in wholesale inflation gives the Indian economy valuable breathing room. From enabling potential rate cuts to supporting corporate margins, consumer demand, and government spending, lower inflation paves the way for balanced growth. Yet, cautious policymaking remains essential to ensure that disinflation strengthens rather than destabilizes the economy.
7. Risks and Caveats Ahead
While the recent slowdown in India’s Wholesale Price Index (WPI) signals easing inflationary pressures, it’s important to stay cautious. Several risks and uncertainties could quickly disrupt this favorable trend. Here’s a breakdown of key factors that could challenge the current outlook:
-
Weather & Monsoon Variability
India’s agricultural output is highly dependent on the monsoon. A delayed or deficient monsoon, or even localized droughts, can reduce crop yields significantly. This often leads to a spike in food prices, which in turn can push wholesale inflation higher. Given the large weight of primary articles in the WPI, any adverse weather event can quickly reverse the current benign trend. -
Global Commodity Shocks
India imports large quantities of crude oil, metals, and food items. Sudden price surges in global commodities—whether due to geopolitical tensions, supply constraints, or demand spikes—can feed directly into wholesale costs. For example, a sharp rise in crude oil prices tends to increase fuel and transportation costs, which ripple through the supply chain, pushing WPI upward. -
Supply Chain Disruptions
The post-pandemic world still faces risks from logistics bottlenecks, geopolitical conflicts, or import/export restrictions. Such disruptions can limit the availability of key inputs, forcing up prices unexpectedly. Even short-term hiccups can create volatility in wholesale prices, impacting production costs and margins. -
Base Effects
Inflation data often looks smoother when compared to unusually low price levels from previous years—a phenomenon called the base effect. As these low base months gradually fade from comparisons, year-on-year inflation numbers may appear less favorable, potentially overstating price pressures despite actual stability. -
Inertia in Non-Food Sectors
While WPI covers goods, services, housing, and wages—major components of the Consumer Price Index (CPI)—often show more price stickiness. Rising rents, healthcare costs, and wage demands can keep consumer inflation elevated even when wholesale prices cool down.
What This Means for the Future
The current drop in WPI is encouraging but not guaranteed to continue smoothly. Policymakers, businesses, and consumers should remain vigilant. Factors like weather, global markets, and supply chains can quickly shift inflation dynamics. Combining WPI trends with other economic indicators will offer a clearer picture of India’s inflation trajectory ahead.
8. My Take & Strategic Insights
The recent slowdown in India’s wholesale inflation to just 0.13% is a noteworthy development that signals easing supply-side pressures, particularly in volatile sectors like food and energy. This deceleration is encouraging, hinting that India could be entering a phase of more stable and manageable inflation. However, while this is a positive sign, it’s important to avoid complacency—especially given that inflation in manufactured goods and services remains persistent. Here’s a closer look at what this means and how various stakeholders might navigate the current inflation environment.
My View
The sharp decline in wholesale inflation clearly points to supply-side easing. Lower commodity prices, improved supply chain conditions, and better crop output have all contributed to this trend. This could mark a shift toward a more benign inflationary regime in the near to medium term, easing pressures on businesses and consumers alike.
However, the story isn’t entirely straightforward. Inflation in manufactured goods and services—two significant parts of the economy—continues to show resilience. These sectors are often less sensitive to wholesale price movements and more influenced by factors like labor costs, demand shifts, and global disruptions. So, while wholesale price pressures may be subsiding, underlying inflation risks persist.
Given this complex landscape, I expect the Reserve Bank of India (RBI) to maintain a cautious approach. Rather than aggressive interest rate cuts, the RBI may opt for gradual easing, possibly trimming rates by 25 basis points if economic growth indicators such as industrial output, consumption, and exports stay moderate. The central bank will likely balance supporting growth with keeping inflation expectations anchored.
What to Watch
To better understand where inflation and policy might be headed, here are some critical indicators to monitor over the coming months:
- October–November WPI prints: Will wholesale inflation continue to ease or show signs of rebound? Consistency in low WPI readings would confirm easing supply-side pressures.
- CPI and core inflation trends: Retail inflation data will reveal if the wholesale price relief is passing through to consumers. Core inflation, excluding food and fuel, will be especially telling.
- Agriculture and monsoon updates: India’s monsoon performance directly impacts food production. Any adverse weather events or crop failures could reverse the positive trend in food inflation.
- Global commodity price movements: Oil, gas, and metal prices significantly influence India’s import bills and wholesale inflation. Watch these closely for any volatility.
- RBI policy statements and communication: The central bank’s tone will indicate how confident it feels about inflation trends and growth prospects, guiding market expectations.
For Businesses & Investors
For businesses, the easing of wholesale inflation offers some immediate relief. Companies in raw-material-intensive sectors like manufacturing, FMCG (fast-moving consumer goods), and agro-processing could see a reduction in input costs, potentially improving margins.
Investors and lenders may also benefit from a lower interest rate environment, which could encourage increased capital investment and borrowing. However, the cautious stance by policymakers means that any rate cuts may be modest and measured.
Despite these positives, it’s wise for businesses and investors to maintain a hedging strategy against commodity price risks. Global markets remain unpredictable, and external shocks could quickly affect inflation trajectories.
The low wholesale inflation reading is an encouraging sign of easing supply-side pressures in India’s economy. It opens the door for potential monetary easing and relief for cost-sensitive sectors. However, with inflation in other areas remaining firm and global uncertainties ongoing, a balanced, vigilant approach is essential for policymakers, businesses, and investors alike. Keeping a close eye on upcoming inflation data and central bank signals will be crucial to navigating the months ahead.
9. Frequently Asked Questions (FAQ)
Q1. Does a low wholesale inflation mean consumer prices will fall?
Not necessarily immediately. There is typically a lag in transmission from wholesale to retail. Retail inflation also depends on services, taxes, margin adjustments, and demand-side dynamics.
Q2. Why did vegetables collapse in price?
Likely due to seasonality, bumper harvests, improved supply channels, and base effects. A mix of over-supply and weak seasonal demand also contributed.
Q3. Should the RBI cut rates aggressively now?
While low inflation offers room, the RBI must weigh growth momentum and external risks. A measured approach is more likely than a sharp cut.
Q4. Could inflation bounce back?
Yes. A shock in food supply (weather), global commodity shock, or demand resurgence could reverse the trend.
Q5. How does this compare to previous low WPI months?
India has had episodes of low or negative wholesale inflation in the past, especially when food/commodity cycles turn. But each episode has unique drivers, so past performance is an imperfect guide.
10. Conclusion
The September 2025 wholesale inflation print—just 0.13 %—is a strong, perhaps surprising, signal that upstream cost pressures in India are cooling. The sharp fall in food and energy prices is doing the heavy lifting, while the more rigid manufactured sector is slowing, not reversing.
For policymakers, this offers room to breathe—and perhaps maneuver toward modest rate cuts. For businesses, it may ease cost burdens. For consumers, some relief may flow downstream. But risks remain: weather, global commodities, and stuck non-food inflation could complicate the path forward.
In sum, this is not a victory lap moment—but rather a hopeful inflection point. If the trend holds through the next few months, it could reset the inflation narrative in India for 2025–26.
References & Further Reading
- Reuters — “India’s September wholesale price inflation eases to 0.13%”
- Economic Times — “India's wholesale inflation slows to 0.13% in September”
- Livemint — “Wholesale inflation eases to 0.13% in September”
- Business Standard — “Wholesale inflation eases to 0.13% in September”
- Financial Express — “India’s wholesale inflation eases to 0.13% from 0.52%”
- NewsonAir — “India’s WPI Inflation Eases to 0.13% in September”
- Additional economic commentary & historical context from Indian government and media sources
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