India’s wholesale inflation eases to 0.13% in September

NEW DELHI: India’s wholesale inflation eased in September after a sharp rise in the previous month, helped by a decline in food and fuel prices, provisional data from the commerce and industry ministry showed on Tuesday.

The wholesale price index (WPI)-based inflation fell to 0.13% in September, from 0.52% in August, after staying in negative territory in July -0.58% and June -0.19%. Economists polled by Reuters had projected the wholesale price index to rise 0.50% year-on-year in September.

A year earlier, WPI inflation stood at 1.91%.

Food inflation, a key driver of the index, turned negative at -1.99% in September, compared with 0.21% in August, -2.15% in July, and -0.26% in June. The fall in September was led by lower prices of vegetables, wheat, pulses, and oilseeds. Prices of cereals and paddy also declined from the previous month.

Overall, food articles saw prices fall 5.22% in September, compared with a 3.06% decline in August.

Non-food articles rose 3.14%, down from 5.56% growth a month earlier. Fuel and power prices slipped 2.58% in September, compared with a 3.17% drop in August, while prices of manufactured products increased 2.33%, compared with a rise of 2.55% in the prior month.

Vegetable slump drives WPI cooldown

“A sharp decline in food prices, down 2% year-over-year in September 2025, was a significant factor in pulling down wholesale inflation. Vegetable prices saw the steepest drop within the food segment, plummeting 24.4% year-over-year in September 2025 (August 2025: up 0.2% year-over-year). The fuel and power segment also recorded deflation of 2.6% in September 2025, marking the sixth consecutive month of decline,” said Paras Jasrai, associate director at India Ratings and Research.

“The fuel and power segment also recorded deflation of 2.6% in September 2025, marking the sixth consecutive month of decline,” Jasrai said.

Core inflation rose to a 31-month high of 1.9%, driven by record jewellery price growth of 34.1% year-over-year. However, a decline in base metal prices and subdued inflation in other items helped keep core inflation relatively contained at around 2.0%, he said.

Jasrai said the wholesale inflation rate was flat at 0.02% in Q2FY26, an eight-quarter low, and will likely result in muted GDP deflator growth and pressure on corporate margins.

Looking ahead, he said, a favourable base effect (October 2024: 2.8%) could push the WPI back into deflation in October 2025. “Ind-Ra anticipates wholesale deflation in October 2025 to be around 0.5%,” he noted.

Sonal Badhan, economist at the Bank of Baroda, noted that softening crude oil prices could provide a positive boost to headline WPI. “In October 2025 so far, Brent prices have fallen sharply by 16.5%, as risk premiums have come down due to easing geo-political tensions (deal between Israel and Hamas).”

She added that a renewed US-China trade spat and the US government shutdown could weigh on global demand. “If this trend continues, it may exert downward pressure on fuel inflation in the coming months, thus bringing the headline inflation further down.”

India’s retail inflation fell to 1.54% in September, down from 2.07% in August, slipping below the Reserve Bank of India’s 2-6% target range. The drop, driven by easing food prices, marked the lowest reading since June 2017.

Retail inflation has remained below 6% since September 2023. Food inflation, which accounts for nearly half the Consumer Price Index (CPI) basket, dropped sharply to -2.28% in September, from -0.69% in August.