Wholesale inflation falls to 27-month low in October as food prices slump

New Delhi: India’s wholesale inflation fell to a 27-month low in October on the back of record low food prices, provisional data from the ministry of commerce & industry showed on Friday.

Wholesale price index (WPI)-based inflation fell to -1.21% annually in October after coming in at 0.13% the previous month. Economists polled by Reuters had projected wholesale prices would fall 0.6% year-on-year in October. A year earlier, WPI inflation stood at 2.75%.

Food inflation, a key driver of the index, turned negative at -5.04% in October, from -1.99% in September, 0.21% in August, -2.15% in July, and -0.26% in June. The fall in wholesale prices in October was led by lower prices of vegetables, wheat, pulses and oilseeds. Prices of cereals also declined from the previous month. Overall, food articles saw prices fall 8.31% in October against a 5.22% decline in September and a 3.06% decline in August.

Non-food articles rose 1.54% in October, down from a 3.14% rise the previous month. Fuel and power prices slipped 2.55% in October against a 2.58% fall in September, while prices of manufactured products rose by 1.54% in October against 2.33% the previous month.

Paras Jasrai, associate director and economist at India Ratings and Research said, “A sharp deflation in food items at 5% in October 2025 (at a record low in the 2011-12 series) led to the wholesale prices swinging back to deflation after a gap of two months and at a 27-month low. The record low food deflation in October 2025 was due to a deflation in key food items like cereals (1.1%, 50-month low), pulses (16.5%, in double digits for the past six months), vegetables (35%, 34-month low) and fruits (7.0%, 26-month low)."

“A sustained decline in food prices, although it helps in supporting consumer pockets, needs to be monitored closely as it could hurt farm incomes, eventually slowing consumption demand. The fuel and power segment also recorded deflation of 2.6% in October 2025, marking the seventh consecutive month of decline,” Jasrai added.

Core inflation

Meanwhile, core inflation fell to a three-month low of 1.5% in October from 1.9% in September, largely due to a moderation in price growth of base metals and jewellery.

“Overall, 13 of the 21 sub-items within the core segment saw lower inflation in October 2025 compared to the previous month. In fact, it was the highest in five months (after 14 in May), indicating a broader benign inflationary environment due to low global commodity prices,” Jasrai added.

Sonal Bandhan, an economist at the Bank of Baroda, said major commodity prices (except lead) are facing downward pressure globally, owing to weak demand. “Slower pace of deflation in fuel inflation was driven by the mineral oil index. However, more recently, oil prices have been falling at a slower pace,” she said.

“Going forward, international commodity prices and oil prices may inch up if there is a revival in demand following the re-opening of the US government after a 43-day shutdown, and if the Fed decides to lower rates in December,” she added.

Retail inflation

India’s retail inflation fell to 0.25% in October, down from 1.44% (revised) in September, slipping below the Reserve Bank of India’s 2-6% target range during the month. The drop, driven by the statistical effect of a favourable base and deeper deflation in food items, marked the lowest reading in the current CPI series.

Retail inflation has remained below 6% since September 2023. Food items, which account for nearly 40% of the inflation basket and thus have significant influence on headline inflation, plunged to -5.02% in October from -2.33% in September.