Oct-25 WPI inflation dips to -1.21% on the back of GST cuts

17 Nov 2025 , 02:03 PM

OCTOBER 2025 WPI INFLATION DIPS SHARPLY TO -1.21%

WPI inflation is giving a clear indication that GST impact is suppressing manufacturing inflation really hard. Between August and October 2025, the WPI inflation has plummeted from 0.52% to -1.21%; a sharp fall of 173 basis points. Incidentally, this is the lowest reading of WPI inflation in the last one year, and coincides with the retail CPI inflation also touching a series-low of 0.25% this month. We have CPI and WPI largely flowing in sync.

While manufacturing basket saw marginal tapering in September, the full impact of GST cuts was felt in October as manufacturing inflation dipped to 1.54%. With its 64.23% weight in the WPI basket, manufacturing inflation was the trigger for negative inflation in October. The base effect did play a part, but WPI food basket has followed the CPI food basket and dipped deeper into negative. GST impact may keep WPI inflation subdued for longer.

Month	WPI Inflation (%)	CPI Inflation (%)
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	-0.19%	2.10%
Jul-25	-0.58%	1.61%
Aug-25	+0.52%	+2.07%
Sep-25	+0.13%	+1.54%
Oct-25	-1.21%	+0.25%

Data Source: Office of the Economic Advisor

Let us look at how WPI and CPI inflation measure against the last 12 months rolling averages? In the case of WPI inflation, the average of the last 12 rolling months is 1.30%, so the current month WPI inflation is substantially lower at -1.21%. For CPI inflation, the average of the last 12 rolling months was 3.45%, and the 0.25% reading is also well and truly below that. In WPI Inflation, Manufacturing basket has a big impact due to its 64.23% weight. The GST cuts across major products of mass consumption led to a sharp fall in wholesale prices, which explains the sharp fall in manufacturing CPI to 1.54%.

WPI INFLATION SHIFTS: YOY AND MOM

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

Commodity Set	Weight	Oct-25 WPI	Sep-25 WPI	Aug-25 WPI
Primary Articles	0.2262	-6.18%	-3.32%	-2.10%
Fuel & Power	0.1315	-2.55%	-2.58%	-3.24%
Manufactured Products	0.6423	1.54%	2.33%	2.62%
WPI Inflation	1.0000	-1.21%	0.13%	0.52%
Food Basket	0.2438	-5.04%	-1.99%	0.21%

Data Source: Office of the Economic Advisor

While the fuel basket remained flat MOM, food inflation fell sharply on hopes of another good Rabi season, based on early sowing data. Also, the heavyweight manufacturing inflation dipped sharply due to the GST cuts. Let us now turn to the high frequency MOM data for each of the WPI components.

Commodity Set	Weight	Oct-25 WPI	Sep-25 WPI	Aug-25 WPI
Primary Articles	0.2262	-0.42%	-1.05%	1.33%
Fuel & Power	0.1315	1.12%	-0.07%	-0.14%
Manufactured Products	0.6423	-0.07%	0.14%	0.28%
WPI Inflation	1.0000	-0.06%	-0.19%	0.52%
Food Basket	0.2438	0.00%	-0.78%	1.10%

Data Source: Office of the Economic Advisor

The short-term high frequency trend clearly shows that most of the short term WPI suppression has come from manufacturing basket and the food basket. One needs to watch the crude basket impact, which is in the negative, but the high frequency data shows some element of pressure on oil prices. The concerns, possibly, stem from the fact that tightening of sanctions by the US on Russia could spike oil prices despite an OPEC glut.

WPI BASKET – BIG SWING FACTORS IN OCTOBER 2025

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

Commodity	WPI Inflation	Commodity	WPI Inflation
Oil Seeds	6.15%	Onions	-65.43%
Minerals	5.57%	Potatoes	-39.88%
Vegetable Oil and Fats	4.83%	Vegetables	-34.97%
Tobacco Products	3.18%	Pulses	-16.50%
Milk	3.02%	Crude Petroleum	-13.56%
Cement, Lime, Plaster	2.48%	Liquified Petroleum Gas (LPG)	-9.52%
Non-Metallic Minerals	1.99%	Fruits	-7.03%
Textiles	1.91%	Semi-finished Steel	-2.88%
Pharma Products	1.88%	Petrol	-2.60%
Food Products	1.76%	High Speed Diesel (HSD)	-1.89%

Data Source: Office of the Economic Advisor

Let us look at what caused the upward pressure on WPI inflation in October 2025. Out of the top 10 items pushing WPI inflation up, 7 are from manufacturing basket and 3 from the primary basket. What about the downward pressure on WPI? There are 5 products from the food basket, 4 from energy basket, and 1 from the manufacturing basket. The WPI boosters and pressure points are fairly self-explicit about the WPI trend.

The news on WPI inflation has 3 dimensions to it. Firstly, the food basket shows sharp disinflation on expectations of a robust Rabi crop this year. There is also the lag effect of GST cuts on some of the food products. Secondly, the impact on manufacturing basket is largely an outcome of the GST cuts, which manifested in October 2025. It remains to be seen if this impact is temporary or structural. Lastly, fuel basket may still be the joker in the pack. OPEC is flooding the market, but that could get offset if the US imposes stringent sanctions on Russia. Next few months could be interesting for the WPI inflation basket.