Wholesale Price Inflation Drops to Negative as Retail Inflation Reaches Low

According to data released by the Ministry of Statistics and Programme Implementation, retail inflation, as measured by the Consumer Price Index (CPI), reached its lowest level since January 2019. This marked a significant decrease from the 8.4% recorded in June 2024. Meanwhile, the Wholesale Price Index (WPI), as reported by the Ministry of Commerce and Industry, indicated a contraction of -0.13%, the lowest since October 2023.

The primary driver behind this decrease in inflation was a notable reduction in food prices, particularly vegetables, which experienced a substantial deflation of 3.75% in June. This came in contrast to the previous month's deflation rate of 1.56%. Rajani Sinha, Chief Economist at CareEdge Ratings, stated, "In the food basket, there was deflation in key items such as vegetables, pulses, spices, and meat. Looking ahead, food inflation is likely to remain contained, supported by healthy agricultural activity and a favourable base."

In addition to food prices, the easing of crude oil prices further contributed to the drop in wholesale inflation. The fuel and light category within the CPI reported a decline in inflation to 2.55% in June, down from 2.8% in May. This marginal decrease is noteworthy given that the inflation rate in June 2024 was significantly lower, at -3.6%.

Other areas of inflation remained stable or saw minor fluctuations. The housing segment reported an increase, rising to 3.24% in June from 3.16% in May. Conversely, inflation in the paan, tobacco, and intoxicants category remained unchanged at 2.4%.

In terms of wholesale prices, the article category recorded a contraction of 3.75%, a significant decline from the 11.1% inflation experienced in June of the previous year. Overall, the food group within the WPI also saw a decrease of 0.3% in June 2025.

The crude petroleum and natural gas sector saw notable price contractions of 12.3%, marking the tenth consecutive month of declining prices, with the last three months witnessing double-digit contractions. This trend is expected to have significant implications for the broader economy, particularly in terms of production costs and consumer pricing decisions.

As inflation continues to cool down, economists are observing the potential impacts on consumer spending and economic growth. Analysts suggest that sustained low inflation may encourage consumer confidence, potentially boosting economic activity in the coming months. The government and relevant ministries will likely monitor these trends closely as they formulate economic policies moving forward.