April WPI inflation tapers to 0.85%, as food and fuel prices dip

15 May 2025 , 10:18 AM

APRIL WPI INFLATION EASES TO 0.85%

In March, WPI inflation fell by just 33 bps to 2.05%. However, in April 2025, WPI inflation has fallen to a 13 month low of 0.85%. However, the February 2025 WPI inflation was revised up to 2.45%. While food products and fuel inflation dipped into negative zone, even manufacturing inflation tapered after a long gap. However, manufacturing inflation at 3.00% needs to come down further. Here is a quick dual inflation view over the last 13 months.

Month	WPI Inflation (%)	CPI Inflation (%)
Apr-24	1.19%	4.83%
May-24	2.74%	4.80%
Jun-24	3.43%	5.08%
Jul-24	2.10%	3.60%
Aug-24	1.25%	3.65%
Sep-24	1.91%	5.49%
Oct-24	2.75%	6.21%
Nov-24	2.16%	5.48%
Dec-24	2.57%	5.22%
Jan-25	2.51%	4.26%
Feb-25	2.45%	3.61%
Mar-25	2.05%	3.34%
Apr-25	0.85%	3.16%

Data Source: Office of the Economic Advisor

There was a rather strong base effect contribution in April 2025. Between March 2024 and April 2024, the WPI inflation had spiked from 0.26% to 1.19%. This was a key factor in the WPI inflation for April 2025 falling sharply by 120 basis points to 0.85%. Broadly, the WPI trend since December 2024 has been trending lower, just like the CPI inflation.

The one concern in the last few months has been the persistently elevated levels of manufacturing inflation. Manufacturing has a weightage of 64.23% in the WPI basket, and is an  important driver. For April 2025, the manufacturing inflation also trended lower by 45 bps to 2.62%. This is indicative of reduced pressures from supply chains.

READING WPI INFLATION SIX-MONTH TREND

Here is a quick look at the 6 month trend of key WPI inflation variables.

• Headline WPI inflation is down from 2.16% to 0.85%, between November 2024 and April 2025. The biggest contribution has come from the food basket and the primary basket, where the inflation dipped into negative zone.
  
• Primary articles WPI tapered from 5.49% to -1.44%. This was driven by a sharp fall in food WPI inflation from 8.48% to -0.86% between Nov-24 and Apr-25. The non-food primary basket WPI hardened from -0.61% to 1.40%.
  
• The Energy basket saw WPI inflation hardening from -4.03% to -2.18%; albeit still in contraction mode. In the energy basket, downward pressure came from LPG and petrol, even as high speed diesel (HSD) was relatively flat in this period.
  
• What about manufacturing? Between Nov-24 and Apr-25, manufacturing WPI inflation hardened from 2.07% to 2.62%. While inflation tapered in manufacture of food products, it was higher for generic manufacturing.

The WPI inflation has fallen to a 13-month low, although it is essential for the manufacturing inflation to  fall further.

WPI INFLATION SHIFTS: YOY AND MOM

Let us first look at how the WPI inflation basket across primary products, fuel & power, and manufacturing products shifted YOY in last 3 months. 

Commodity Set	Weight	Apr-25 WPI	Mar-25 WPI	Feb-25 WPI
Primary Articles	0.2262	-1.44%	0.76%	2.92%
Fuel & Power	0.1315	-2.18%	0.20%	-0.97%
Manufactured Products	0.6423	2.62%	3.07%	3.00%
WPI Inflation	1.0000	0.85%	2.05%	2.45%
Food Basket	0.2438	2.55%	4.66%	6.17%

Data Source: Office of the Economic Advisor

Here are some key observations. While the food basket tapered in the month of March, there was also a sharp fall in the fuel and power basket, thanks to the sharp fall in Brent crude prices. The good news is that the manufacturing basket is finally showing signs of lower WPI inflation. Let us turn to high frequency MOM data. 

Commodity Set	Weight	Apr-25 WPI	Mar-25 WPI	Feb-25 WPI
Primary Articles	0.2262	-0.11%	-1.18%	-1.53%
Fuel & Power	0.1315	-2.82%	-0.65%	-0.92%
Manufactured Products	0.6423	0.35%	0.28%	0.42%
WPI Inflation	1.0000	-0.19%	-0.26%	-0.06%
Food Basket	0.2438	0.26%	-0.32%	-1.10%

Data Source: Office of the Economic Advisor

The short term pressures are essentially coming from manufacturing and the food basket within the primary basket. Energy basket is putting downward pressure MOM too.

WPI BASKET – BIG SWING FACTORS IN APRIL 2025

Swing factor are drivers that trigger the shift in WPI. The left hand side (LHS) looks at positive drivers; while right hand side (RHS) looks at negative drivers.

Commodity	WPI Inflation	Commodity	WPI Inflation
Vegetable Oil	30.95%	Potatoes	-24.30%
Minerals	9.69%	Crude Petroleum	-19.85%
Food Products	9.51%	Vegetables	-18.26%
Fruits	8.38%	Crude & Natural Gas	-15.55%
Wheat	7.41%	Petrol	-7.70%
Cereals	3.81%	Pulses	-5.57%
Tobacco Products	2.67%	High Speed Diesel (HSD)	-5.04%
Leather Products	2.43%	Cement, Lime, Plaster	-1.42%
Paper Products	2.10%	Basic Metals	-0.64%
Paddy	1.87%	Eggs, Meat, Fish	-0.29%

Data Source: Office of the Economic Advisor

Unlike in previous months, the upward pressure on the WPI basket is not just coming from the food basket, but also from manufacturing basket. Out of the top 10 items pushing WPI inflation up, 5 are from food basket, and 5 from manufacturing basket. What about the downward pressure on WPI? There are 4 products from the food basket putting downward pressure on WPI, with vegetables being the most prominent. Of the remaining, there are 4 energy products and 2 manufacturing basket products.

WHAT WE READ FROM APRIL 2025 WPI DATA

Last month, we had spoken about WPI inflation and CPI inflation starting to converge. That trend has become more prominent this month. While food was leading the uptrend for a long time, it is now leading the downtrend in WPI inflation. That is similar to the trend we see in CPI inflation also. However, while the CPI basket is food heavy (47.25% weight), the WPI basket is manufacturing heavy (64.23% weight). Hence manufacturing prices have to come down for WPI inflation to fall on a sustainable basis. That would largely depend on how the tariffs shape up globally and how India leverages FTAs in coming months!