By Bl New Delhi

Copyright thehindubusinessline

After a gap of two months and with the rise in food and manufactured goods prices, wholesale inflation based on the Wholesale Price Index (WPI turned positive in August and recorded 0.52 per cent, the government reported on Monday. This is in line with the retail inflation based on Consumer Price Index (CPI), which rose to 2.07 per cent after a gap of 9 months.

“Positive rate of inflation in August, 2025 is primarily due to increase in prices of food products, other manufacturing, non-food articles, other non-metallic mineral products and other transport equipment etc,” the Commerce & Industry Ministry, nodal institution for WPI, said in a statement. WPI-based inflation was (-) 0.58 and (-) 0.19 per cent in July and June, respectively. It was 1.25 per cent in August last year.

Vegetable prices ease deflation; manufacturing firms up

As per WPI data, deflation in food articles was 3.06 per cent in August, as against a deflation of 6.29 per cent in July, with vegetables witnessing a spike in prices. Deflation in vegetables was 14.18 per cent in August, as against 28.96 per cent in July. In the case of manufactured products, inflation was higher at 2.55 per cent in August, as against 2.05 per cent in the month before. Fuel and power saw a negative inflation or deflation of 3.17 per cent in August, as against 2.43 per cent in July.

“Going forward, we expect WPI inflation to moderate with the government’s continued support through structural reforms such as GST 2.0, and Production Linked Incentive (PLI) schemes among others,” said Hemant Jain, President, PHDCCI.

Analysts see WPI rising further

According to Rahul Agrawal, Senior Economist at ICRA Ltd, Food items accounted for as much as 73 bps of the 110 bps uptick in the headline WPI print between August 2025 and July 2025. This was followed by core WPI (non-food manufactured items), which added 27 bps to the headline print, with the inflation in the same rising to a 5-month high of 1.6% in August 2025.

“ICRA expects the headline WPI to rise further to a 6-month high of 0.9 per cent in September 2025, led by a hardening in the YoY prints for global crude oil and commodity prices, as well as the depreciation in the USD/INR pair, even as an elevated base would likely pull down the food index back to the deflationary territory in the month,” Agarwal said.

RBI likely to hold rates in October despite CPI easing

While the expectations of a relatively more favourable CPI inflation trajectory following the GST rationalisation open up space for a rate cut by the MPC, the positive impact of the same on growth outcomes in H2 FY2026, along with the stronger-than-expected GDP growth in Q1, is likely to result in a status quo in the upcoming October 2025 review meeting.

Published on September 15, 2025