June 2025 WPI inflation dips into negative after 17 months

16 Jul 2025 , 10:07 AM

JUNE 2025 WPI INFLATION DIPS TO -0.13%

May 2025 marked the eight consecutive month of lower WPI inflation; almost in sync with a steady fall in CPI inflation. There were no revisions to previous months data. Interestingly, the actual WPI inflation diverged from street expectations. The Reuters consensus estimate had pegged WPI inflation for June higher than May at 0.52%. Instead, WPI inflation not only dipped sharply, but even ended up in the negative at -0.13%; thanks to food and fuel prices.

Month	WPI Inflation (%)	CPI Inflation (%)
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	2.25%	3.34%
Apr-25	0.85%	3.16%
May-25	0.39%	2.82%
Jun-25	-0.13%	2.10%

Data Source: Office of the Economic Advisor

Once again, there was a strong base effect contribution in June 2025. Between May 2024 and June 2024, the WPI inflation had spiked from 2.74% to 3.43%. This was a key factor in the WPI inflation for June 2025 falling to -0.13%. WPI is 356 bps below the Jun-24 peak. Manufacturing inflation has been elevated due to supply chain constraints; and its 64.23% weight makes it an  important driver. For May 2025, manufacturing inflation was tad lower by 7 bps to 1.97%. However, global 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	Jun-25 WPI	May-25 WPI	Apr-25 WPI
Primary Articles	0.2262	-3.38%	-2.02%	-0.91%
Fuel & Power	0.1315	-2.65%	-2.27%	-3.76%
Manufactured Products	0.6423	1.97%	2.04%	2.62%
WPI Inflation	1.0000	-0.13%	0.39%	0.85%
Food Basket	0.2438	-0.26%	1.72%	3.30%

Data Source: Office of the Economic Advisor

Here are some key observations. While the food and primary basket dipped deeper into negative zone, fuel seems to have stabilized. Manufacturing in the last 3 months has fallen from 2.62% to 1.97%, but supply remains an issue. Here is high frequency MOM data.

Commodity Set	Weight	Jun-25 WPI	May-25 WPI	Apr-25 WPI
Primary Articles	0.2262	0.81%	-0.59%	-0.05%
Fuel & Power	0.1315	-2.52%	0.69%	-4.21%
Manufactured Products	0.6423	-0.07%	0.00%	0.21%
WPI Inflation	1.0000	-0.19%	-0.06%	-0.39%
Food Basket	0.2438	0.37%	-0.63%	0.74%

Data Source: Office of the Economic Advisor

The short term high frequency trend of producer prices is deflationary. However, food and manufactured products are starting to see short-term pressure.

WPI BASKET – BIG SWING FACTORS IN MAY 2025

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

Commodity	WPI Inflation	Commodity	WPI Inflation
Vegetable Oil	23.05%	Onions	-33.49%
Food Products	6.99%	Potatoes	-32.67%
Oil Seeds	5.89%	Vegetables	-22.65%
Wheat	3.77%	Pulses	-14.09%
Tobacco Products	2.78%	Crude oil & Natural Gas	-12.31%
LPG	2.68%	Petrol	-6.57%
Leather Products	2.41%	High Speed Diesel (HSD)	-5.12%
Milk	2.26%	Food Articles	-3.75%
Wearing Apparel	2.17%	Semi-finished steel	-3.70%
Beverages	1.65%	Basic Metals	-3.14%

Data Source: Office of the Economic Advisor

Let us look at upward pressure on WPI inflation in June 2025. Out of the top 10 items pushing WPI inflation up, 3 are from food basket, 6 from manufacturing basket, and 1 from the fuel basket. What about the downward pressure on WPI? There are 4 products from the food basket 3 from energy basket, and 2 from the manufacturing basket.

The good news from the WPI inflation data is that; producer inflation is persistently down and, more importantly, the manufacturing inflation is trending lower. This shows that input cost pressures on Indian industry is likely to be contained. However, manufacturing inflation does look very vulnerable to sudden shifts in supply chain constraints.