India’s wholesale inflation eased to 0.39% in May 2025, marking its lowest level in 14 months, according to government data released on June 16. This is the third straight month of decline in the Wholesale Price Index (WPI), signaling continued disinflationary momentum across the economy.
The latest figures follow the Consumer Price Index (CPI) falling to a near six-year low of 2.82%, reflecting broad-based cooling, particularly in food inflation, which dipped below 1%—a level not seen in nearly four years.
Inflation Trends and RBI’s Policy Response
WPI inflation stayed subdued for most of FY24, and although there was a slight rise early in FY25, it has remained well below 3% throughout the year.
This consistent decline in both retail and wholesale inflation has opened the door for monetary easing. The Reserve Bank of India (RBI) has responded with:
- A 50 basis points (bps) rate cut in early June
- 25 bps cuts in February and April
With these moves, the repo rate now stands at 5.5%, a full percentage point lower than at the start of the year.
Outlook for 2025 and Beyond
Economists suggest that further rate cuts may be on the table if the current disinflationary trend continues. Reinforcing this view, the RBI revised its FY26 inflation forecast down to 3.7%, from an earlier estimate of 4%.
The sustained decline in inflation is not only providing relief to consumers and businesses but also giving the central bank more flexibility to support growth through accommodative policy measures.
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