Wholesale Price Inflation Sees First Monthly Decline in Nine Months: What It Means for the Economy

In July, wholesale price inflation in India fell to 9.78%, marking the first monthly decline in nine months. This decrease is primarily attributed to lower fuel and food prices, despite rising inflation in manufactured goods. Experts predict a continued softening of WPI inflation in the coming months, influenced by global commodity prices. The recent data contrasts with rising retail inflation, which increased to 4.45% in July. As the Reserve Bank of India maintains its policy rate, the economic outlook remains cautious. Read on to explore the factors driving these changes and their potential impact on the economy.

By Narendra Chaudhary Aug 14, 2026, 15:25 IST

Wholesale Price Inflation Trends

New Delhi: In a notable shift, wholesale price inflation has decreased month-on-month for the first time in nine months, settling at 9.78% in July, attributed to a decline in fuel and food prices.

The inflation rate based on the wholesale price index (WPI) was recorded at 9.87% in June.

This marks the first month-on-month decline in WPI inflation since October 2025. The easing in July is primarily due to reduced inflation in fuel and power, despite an increase in inflation for primary articles and manufactured goods.

According to the Ministry of Commerce and Industry, key contributors to WPI inflation in July 2026 included mineral oils (including petroleum products), food items, basic metals manufacturing, non-food articles, food product manufacturing, and chemicals.

Inflation in the fuel and power sector fell to 20.05% in July, down from 27.41% in June.

Food article inflation also saw a slight decrease, dropping to 5.44% in July from 5.49% in June.

Conversely, inflation for manufactured products rose to 8.29% in July, compared to 7.48% in June.

The Producer Price Index (PPI), which the government plans to use as a replacement for WPI in about five years, remained steady at 9.6% year-on-year in July compared to June.

While manufacturing and mining sectors experienced lower inflation, increases in agriculture and electricity PPI offset these gains.

Barclays noted in a research report that the trend of WPI inflation has reversed, predicting a continued softening in the coming months as global prices appear to have peaked.

"We believe WPI inflation has reached its peak, and a gradual decline should follow, aligning with lower global commodity prices and crude oil prices since June," Barclays stated.

The ongoing conflict in West Asia, which began on February 28, along with the blockade of the Strait of Hormuz—critical for India's crude oil imports—has kept WPI levels high, exerting pressure on global crude and fertilizer prices.

Rahul Agrawal, Principal Economist at ICRA, commented that the decrease in July's WPI was not widespread, being driven solely by the fuel and power sector, while other sectors showed rising inflation compared to June 2026.

"Looking forward, we expect a more significant reduction in WPI inflation to below 9.5% in August, following peaks of 9.9% during May and June 2026. However, inflation rates are likely to remain high throughout the year, with an average forecast of around 8.5% for FY27," Agrawal added.

This WPI data contrasts with retail inflation figures released earlier this week, which indicated a rise in consumer price index-based retail inflation to 4.45% in July from 4.38% in June, driven by high food prices.

Earlier this month, the Reserve Bank of India's Monetary Policy Committee maintained the benchmark policy rate at 5.25% and projected retail inflation at 5% for FY27.