New Delhi: Wholesale inflation moderated in July to 9.78 per cent from 9.87 per cent in June, primarily due to easing in prices in the fuel and power segments. However, the food inflation in the wholesale price index (WPI) hit a 19-month high of 6.65 per cent in July from 6.1 per cent in June, led by an uptick in manufactured food items and primary food articles, the government said on Friday.
This is the first time since October 2025 that the WPI inflation has fallen month-on-month. “Across groups, mineral oils (containing petroleum products), food articles, manufacture of basic metals, non-food articles, manufacture of food products, and manufacture of chemicals and chemical products have been major drivers of WPI inflation in July 2026,” the commerce and industry ministry said.
As per the data, wholesale inflation in fuel and power dropped to 20.05 per cent in July as against 27.41 per cent in June. “Inflation in food articles too eased marginally to 5.44 per cent in July from 5.49 per cent in June. However, manufactured products saw an uptick in inflation at 8.29 per cent in July, as against 7.48 per cent in June,” the ministry said.
As per the data, the output producer price index (PPI), which will be eventually replaced by the WPI in about 5 years remained unchanged at 9.6 per cent YoY in July vis-a-vis June. “The output PPI saw lower inflation in manufacturing and mining, but higher agriculture and electricity PPI nullified those gains,” the ministry said.
Economists and analysts, however, said that the direction of the WPI has reversed and WPI inflation should soften in coming months as global prices seem to have peaked. “In our view, the WPI inflation has peaked and gradual and modest disinflation from hereon should continue, in line with relatively lower global commodity prices in general and crude oil price in particular since June,” Barclays said in its research note.
As far as fuel and power segments are concerned, the Gulf war, which began on February 28 and the resultant blockade of the Strait of Hormuz, through which the majority of crude oil is imported into India, has kept WPI elevated with pressure on global crude and fertiliser costs.
Icra principal economist Rahul Agrawal said that the moderation in July WPI was not broad-based and was entirely led by the fuel and power group whereas all the other groups witnessed a hardening in their inflation prints vis-a-vis June 2026.
“Looking ahead, we anticipate a larger easing in the wholesale prices to below 9.5 per cent in August, after peaking at 9.9 per cent each during May-June 2026. Nevertheless, prints are likely to remain elevated through much of the year, with an average WPI inflation forecast of around 8.5 per cent for FY27,” Agrawal said.
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