May WPI inflation at 0.39%, as all baskets moderate

17 Jun 2025 , 11:45 AM

MAY 2025 WPI INFLATION FALLS SHARPLY TO 0.39%

May 2025 marked the seventh consecutive month of lower WPI inflation. That is exactly the trend exhibited by CPI inflation too. The March 2025 WPI inflation was revised up by 20 bps to 2.25%, but that does not change the trend in any way. While food and fuel inflation stayed in the negative zone, the sharp fall in manufacturing inflation is a signal that input costs for corporate India are also dipping. Here is the inflation story for last 13 months.

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

Data Source: Office of the Economic Advisor

There was a rather strong base effect contribution in May 2025. Between April 2024 and May 2024, the WPI inflation had spiked from 1.19% to 2.74%. This was a key factor in the WPI inflation for May 2025 falling sharply to 0.39%. WPI is 304 bps below the Jun-24 peak. The one concern in recent months had been the elevated levels of manufacturing inflation. Manufacturing has a weightage of 64.23% in the WPI basket, and is an  important driver. For May 2025, the manufacturing inflation also trended lower by 58 bps to 2.04%. This can be interpreted as a signal of supply chains opening up.

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 2.57% to 0.39%, between December 2024 and May 2025. The biggest contribution has come from the primary basket, where the inflation dipped into negative zone.
• Primary articles WPI fell sharply from 6.02% to -2.02%. This was driven by a sharp fall in food WPI inflation from 8.53% to -1.56% between Dec-24 and May-25. The non-food primary basket WPI also sobered from 2.40% to 1.53%. Mineral oil deflated sharply.
• The Energy basket saw WPI inflation hardening from -2.57% to -2.27%; albeit still in contraction mode. In the energy basket, downward pressure came from petrol and high speed diesel (HSD), while LPG price inflation is in the positive.
• What about manufacturing? Between Dec-24 and May-25, manufacturing WPI inflation softened from 2.14% to 2.04%. While inflation was down from most manufactured products, maximum deflation came from minerals and metals.

Let us now turn to a quick look at the annual and high frequency WPI inflation.

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	May-25 WPI	Apr-25 WPI	Mar-25 WPI
Primary Articles	0.2262	-2.02%	-1.44%	1.26%
Fuel & Power	0.1315	-2.27%	-2.18%	0.00%
Manufactured Products	0.6423	2.04%	2.62%	3.21%
WPI Inflation	1.0000	0.39%	0.85%	2.25%
Food Basket	0.2438	1.72%	2.55%	4.93%

Data Source: Office of the Economic Advisor

Here are some key observations. While the food basket tapered in the month of May into negative territory, a similar trend was seen in the fuel & power basket also. Manufacturing in the last 3 months has fallen from 3.21% to 2.04%. Here is high frequency MOM data.

Commodity Set	Weight	May-25 WPI	Apr-25 WPI	Mar-25 WPI
Primary Articles	0.2262	-0.05%	-0.59%	-0.70%
Fuel & Power	0.1315	-0.95%	-2.63%	-0.85%
Manufactured Products	0.6423	0.00%	0.21%	0.42%
WPI Inflation	1.0000	-0.06%	-0.39%	-0.06%
Food Basket	0.2438	0.11%	0.00%	-0.05%

Data Source: Office of the Economic Advisor

The short term high frequency trend of producer prices is deflationary. However, food is starting to see some pressure on the fringes.

WPI BASKET – BIG SWING FACTORS IN MAY 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	26.49%	Potatoes	-29.42%
Fruits	10.17%	Vegetables	-21.62%
Food Products	8.45%	Onions	-14.41%
Wheat	5.75%	Crude Petroleum	-13.97%
Tobacco Products	4.65%	Crude oil & Natural Gas	-12.43%
Oilseeds	2.79%	Pulses	-10.41%
Milk	2.66%	High Speed Diesel (HSD)	-5.61%
Cereals	2.56%	Basic Metals	-3.11%
Leather Products	2.42%	Semi-finished steel	-2.70%
Wearing Apparel	1.97%	Eggs, Meat, Fish	-1.01%

Data Source: Office of the Economic Advisor

Let us look at upward pressure on WPI inflation in May 2025. 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. Of the remaining, there are 4 energy products and 2 manufacturing basket products.

The good news from the WPI inflation data is that the producer inflation is persistently down and, more importantly, the manufacturing inflation is trending lower. That is a sign that input cost pressures are likely to reduce for Indian corporates, boosting bottom lines.