July 2025 WPI inflation dips further into negative at -0.58%

18 Aug 2025 , 10:36 AM

JULY 2025 WPI INFLATION DIPS TO -0.58%

July 2025 marked the seventh consecutive month of lower WPI inflation; falling in sync with the rapid fall in CPI inflation. In terms of revisions; the May WPI inflation was revised 26 bps lower from 0.39% to 0.13%. Once again, the July 2025 WPI inflation was lower than the street estimates. WPI inflation dipped into negative territory for the second month in a row. While food and primary basket fell sharply, fuel and manufacturing hardened marginally.

Month	WPI Inflation (%)	CPI Inflation (%)
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	2.25%	3.34%
Apr-25	0.85%	3.16%
May-25	0.13%	2.82%
Jun-25	-0.13%	2.10%
Jul-25	-0.58%	1.55%

Data Source: Office of the Economic Advisor

Let us quickly look at the base effect impact. Between June 2024 and July 2024, the WPI inflation actually dipped from 3.43% to 2.10%. Despite such a sharp dip, the WPI inflation has fallen to -0.58%, indicating that effective fall in WPI was much deeper. WPI is 401 bps below the June 2024 peak. Manufacturing inflation remains elevated due to supply chain constraints; and its 64.23% weight makes it a  key driver. For July 2025, manufacturing WPI inched up by 8 bps to 2.05%. Global macro uncertainty is likely to remain an overhang!

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	Jul-25 WPI	Jun-25 WPI	May-25 WPI
Primary Articles	0.2262	-4.95%	-3.38%	-1.75%
Fuel & Power	0.1315	-2.43%	-2.65%	-4.80%
Manufactured Products	0.6423	2.05%	1.97%	2.11%
WPI Inflation	1.0000	-0.58%	-0.13%	0.13%
Food Basket	0.2438	-2.15%	-0.26%	1.93%

Data Source: Office of the Economic Advisor

Here are some key observations. While the food and primary basket dipped deeper into negative zone, fuel hardened marginally. Manufacturing WPI in the last 3 months remains flat, due to supply chain issues. We turn to high frequency MOM data.

Commodity Set	Weight	Jul-25 WPI	Jun-25 WPI	May-25 WPI
Primary Articles	0.2262	1.18%	0.54%	-0.32%
Fuel & Power	0.1315	1.12%	0.07%	-1.92%
Manufactured Products	0.6423	-0.14%	-0.14%	0.07%
WPI Inflation	1.0000	0.39%	0.07%	-0.32%
Food Basket	0.2438	0.58%	0.16%	-0.42%

Data Source: Office of the Economic Advisor

The short term high frequency trend of producer prices shows upward pressure in July, and this could be largely due to supply chain constraints. High frequency pressure on WPI is coming from fuel and primary articles.

WPI BASKET – BIG SWING FACTORS IN JULY 2025

Swing factor are drivers that trigger the shift in WPI; both positive and negative.

Commodity	WPI Inflation	Commodity	WPI Inflation
Vegetable Oil	22.04%	Onions	-44.38%
Oil Seeds	9.77%	Potatoes	-41.26%
Food Products	6.74%	Vegetables	-28.96%
Wheat	4.40%	Pulses	-15.12%
Cement, Lime, Plaster	3.42%	Crude Petroleum	-14.86%
Non-metallic Minerals	2.69%	High Speed Diesel (HSD)	-4.30%
Leather Products	2.57%	Fruits	-2.65%
Wearing Apparel	2.50%	Basic Metals	-2.34%
Milk	2.20%	Semi-finished steel	-2.11%
Tobacco Products	1.81%	Eggs, Meat, & Fish	-1.09%

Data Source: Office of the Economic Advisor

Let us look at upward pressure on WPI inflation in July 2025. Out of the top 10 items pushing WPI inflation up, 4 are from food basket and 6 from the manufacturing basket. What about the downward pressure on WPI? There are 6 products from the food basket 2 from energy basket, and 2 from the manufacturing basket.

The good news from the WPI inflation data is that; producer inflation is persistently down, although manufacturing inflation is flat. Input cost pressures on Indian industry may be subdued, but will not go away in a hurry. The only concern is that the tariffs could eventually have a trickle down effect and translate into imported inflation for India!