The Business Bytes
THEBUSINESSBYTES BUREAU
NEW DELHI, JUNE 16, 2025
India’s wholesale inflation dipped to a 14-month low of 0.39 per cent in May 2025, down from 0.85 per cent in April and 2.05 per cent in March, according to data released by the Ministry of Commerce and Industry on Monday. This steady decline in the Wholesale Price Index (WPI) reflects a broad-based easing in prices, particularly in food items and fuel, including petrol and diesel. The month-on-month WPI inflation also turned negative at (-) 0.06 per cent in May, indicating a softening cost trend in the wholesale market.
This downward trajectory in WPI aligns with the recently released Consumer Price Index (CPI) figures, which revealed that retail inflation eased to 2.82 per cent in May—its lowest level since February 2019. Notably, food inflation decelerated sharply to 0.99 per cent, marking its lowest since October 2021 and continuing a seven-month streak of moderation, buoyed by rising agricultural output.
The Reserve Bank of India, responding to the favorable inflation outlook, slashed the repo rate by 50 basis points—from 6 per cent to 5.5 per cent—in its latest monetary policy review, aimed at energizing economic growth. Additionally, the RBI reduced the Cash Reserve Ratio (CRR) by 100 basis points to 3 per cent, to be executed in four tranches. This liquidity infusion is expected to inject around ₹2.5 lakh crore into the banking system, thereby strengthening credit flow and supporting overall economic momentum.
RBI Governor Sanjay Malhotra underscored that inflation has cooled significantly from levels above the central bank’s tolerance band in October 2024 to well below target. The revised inflation outlook for 2025-26 has been adjusted downward to 3.7 per cent from the earlier projection of 4 per cent. He further asserted that the near-term and medium-term inflation projections indicate a sustained alignment with the RBI’s 4 per cent target, and even suggest a potential undershoot as the year progresses.
