Wholesale inflation falls to 2.05% in March, lowest in four months; what it means for your wallet
PTC Web Desk: India’s wholesale inflation, measured by the Wholesale Price Index (WPI), dropped to 2.05% in March 2025, reaching its lowest level in four months. The last time it was this low was in November 2024, when WPI stood at 1.89%. In comparison, February 2025 recorded 2.38%, highlighting a steady downward trend. This decline has been largely driven by a reduction in the prices of daily essential items and food products.
The Ministry of Commerce and Industry released this data today, showing that the inflation rate has eased primarily due to falling costs in the food and essential goods category. In March, inflation for daily essential items fell sharply from 2.81% to just 0.76%, while food inflation dropped from 5.94% to 4.66%. However, fuel and power inflation, which was in negative territory at -0.71% in February, turned slightly positive at 0.20%. On the other hand, manufactured products inflation saw a minor increase, rising from 2.86% to 3.07%.
The WPI is influenced by three major components: manufactured products (63.75%), primary articles such as food and raw materials (22.62%), and fuel and power (13.15%). Since manufactured goods have the largest share, any changes in their prices have a major impact on overall wholesale inflation.
Prolonged high wholesale inflation affects various productive sectors in the economy. When WPI remains elevated for an extended period, manufacturers and producers often pass the increased costs on to consumers, leading to higher retail prices. The government can attempt to control WPI through tax adjustments, such as cutting excise duty on fuel, which was done in the past to offset rising crude oil prices. However, such interventions have limits and cannot be a long-term solution.
It’s important to note that WPI inflation differs from retail inflation, which is measured by the Consumer Price Index (CPI). CPI is based on the prices that consumers directly pay, whereas WPI reflects prices at the wholesale or business-to-business level. For instance, in CPI, food and beverages account for 45.86%, housing for 10.07%, and other items like fuel make up the rest. In contrast, WPI gives more weight to industrial goods such as metals, chemicals, plastics, and rubber, making it a key indicator for producers and industrial sectors.
The WPI is further divided into specific categories. The primary articles segment, with 22.62% weight, includes food articles (like cereals, vegetables, and wheat), non-food articles (such as oilseeds), minerals, and crude petroleum. Fuel and power have a 13.15% weight, while manufactured products dominate with 64.23%.
Overall, the latest drop in wholesale inflation suggests some relief for producers and signals that the price pressures on essential goods are easing. However, rising inflation in manufacturing and fuel sectors shows that close monitoring will still be required in the months ahead.
- With inputs from agencies
