After staying in deflation for the last two months, food inflation switched back to the positive zone and printed a three-month high of 0.21 per cent
After hitting a recent low of -0.58 per cent in July 2025, the Wholesale Price Index (WPI) turned positive in August to 0.45 per cent year-on-year (YoY), as per a report by Union Bank of India (UBI). The rise was primarily broad-based as all three segments gained momentum.
Food inflation switched back to the positive zone after staying in deflation for the last two months and printed a three-month high of 0.21 per cent as compared to -2.14 per cent in July. Core inflation spiked from 1.20 per cent in July to 1.69 per cent in August, whereas fuel inflation strengthened from -3.84 per cent to -3.53 per cent.
The report noted that the fading base effect also played a part as WPI was 1.25 per cent and core inflation was 0.56 per cent in August 2024. Food WPI spiked both on a yearly basis as well as sequentially as food prices witnessed a broad-based month-on-month strengthening. Apart from fruits, milk and eggs-fish-and-meat segments, all other sub-segments edged up during the month.
Core WPI, which reflects inflation excluding food and fuel, has likely gone up from 1.20 per cent YoY last month to 1.69 per cent in August, mainly led by non-food articles, even as minerals are seen substantially down. UBI noted that MoM core WPI is also estimated to have gone up from 0.05 per cent in July to 0.16 per cent in August amid flat commodity prices.
Going forward, uncertainty about shifting trade scenarios due to increased US tariffs and geopolitical crisis will probably keep global commodity prices volatile and affect WPI dynamics. Weather disruptions and related supply concerns are the main factors to be watched out for domestically that may affect the WPI in the short term. The report added that Goods and Services Tax (GST) reforms may provide significant relief to WPI inflation as well from October
