Wholesale price inflation drops to 14-month low in May

New Delhi: Wholesale price based inflation dropped to a 14-month low of 0.39 per cent in May, driven by a sharp drop in the prices of minerals and non-food items, data released by the Ministry of Commerce and Industry showed on Monday.

The Wholesale Price Index (WPI) based inflation stood at 0.85% in April. Wholesale food inflation fell to 1.7 per cent in May, the lowest level in 19 months.

“The outlook for food inflation has improved considerably. Positive indicators such as favorable prospects for agricultural production, recent reductions in basic customs duties on edible oils, and adequate reservoir levels are expected to keep food prices in check,” said Rajani Sinha, Chief Economist, CareEdge Ratings.

The India Meteorological Department’s forecast of an above-normal monsoon further supports this outlook. However, the spatial and temporal distribution of monsoon rainfall will be crucial—especially considering the 31 per cent cumulative rainfall deficit observed so far, Sinha added.

Core inflation, WPI excluding food and fuel, eased to a five-month low of 0.8 per cent in May.

The fuel & power prices declined by 2.2 per cent in May when compared with the same month last year. Energy prices in the wholesale market dipped by 12.4 per cent in May, year-on-year.

This was the straight ninth month of contraction in energy prices. Energy prices have declined sharply in the recent months due to deceleration in global commodity prices. However, the decline has not been reflected in the retail prices of petrol and diesel due to taxes and other factors.

Analysts warn that the energy prices might jump in the coming month due to the escalation in Israel-Iran conflict.

“The conflict between Israel and Iran has added fuel to the global economic uncertainty which is already marred by tariffs-led volatility. The crude oil prices are in the vicinity of $75/bbl mark and if the conflict escalates further then that could spring up wholesale inflation and have broader economic ramifications,” said Paras Jasrai, Associate Director at India Ratings and Research.

“However, favourably, declining food prices have given a cushion in keeping wholesale inflation at tepid levels,” Jasrai added. Decline in the prices of vegetables and pulses led to a sharp drop in food inflation. The prices of vegetables in May were down by 21.6 per cent year-on-year, the sharpest pace of decline since February 2023.

Pulses became cheaper by 10.4 per cent year-on-year during the month under review. This was the sharpest decline in the prices of pulses since October 2018.

Cereals inflation dropped to a 44-month low of 2.6 per cent in May 2025 on the back of good rabi and kharif output.

Inflationary pressure has eased in wholesale as well as retail markets. As per the National Statistics Office data released last week, the Consumer Price Index (CPI) inflation declined to a 75-month low of 2.82 per cent in May. Retail food inflation fell to 0.99 per cent in May.

Broadly in line with the wholesale markets, retail price of vegetables in May was 13.7 per cent lower in May when compared with the same month last year while pulses were cheaper by 8.2 per cent year-on-year.