Wholesale price inflation falls to 27-month low of (-) 1.21 pc in Oct on GST cut, favourable base

Wholesale Price Inflation (WPI) fell to a 27-month low of (-) 1.21 per cent in October, led by a sharp deflation in food items like pulses and vegetables, and lower prices of fuel and manufactured items, government data showed on Friday.

WPI-based inflation was 0.13 per cent in September and 2.75 per cent in October last year.

“The negative rate of inflation in October 2025, is primarily due to decrease in prices of food articles, crude petroleum & natural gas, electricity, mineral oils and manufacture of basic metals etc.,” the industry ministry said in a statement.

According to WPI data, deflation in food articles was 8.31 per cent in October, compared to 5.22 per cent in September, with onion, potato, vegetables and pulses seeing a decline in prices.

In vegetables, deflation was 34.97 per cent in October, against 24.41 per cent in September. In pulses, deflation was at 16.50 per cent in October, while in potato and onion it was 39.88 per cent and 65.43 per cent, respectively.

In the case of manufactured products, inflation eased to 1.54 per cent, from 2.33 per cent in September.  Fuel and power witnessed a negative inflation or deflation of 2.55 per cent, against 2.58 per cent in September, thus recording a decline for seven consecutive months.

“Looking ahead, a favourable base effect in the rest of FY26 is expected to keep the wholesale index into deflation. Consequently, Ind-Ra anticipates wholesale deflation in November 2025 to be under 1 per cent,” said Paras Jasrai, Associate Director at India Ratings and Research.

The fall in WPI inflation is on expected lines after the rates of Goods and Services Tax (GST) were slashed effective September 22.

GST rates on daily use mass consumption items were cut as part of the tax rate rationalisation under which the four-tier tax structure was brought down to just 2 slabs of 5 and 18 per cent.

The tax cuts which lowered prices of goods, plus a favourable inflation base of last year, have pulled down both wholesale and retail inflation.

Data released last week showed, retail inflation was at an all-time low of 0.25 per cent in October, driven down by GST rate cuts and a high base of last year. In September retail or consumer price index inflation was 1.44 per cent.

The Reserve Bank of India (RBI), which takes into account retail inflation, had kept benchmark policy rates unchanged at 5.5 per cent last month.

The decline in both retail and WPI inflation would put pressure on the RBI to cut benchmark interest rates in the next monetary policy review meeting scheduled on December 3-5.

Jasrai, however, said based on the trend of India’s economic growth, the rationale for monetary easing is not very strong. FY26 retail inflation is now expected to be going down to around 2.5 per cent.

“However, to prevent the economy going deep in sluggish and weak economic growth, the RBI may go for a 25-50 bp cut in repo rate in its December 2025 monetary policy,” he added.

PHDCCI, CEO & Secretary General, Ranjeet Mehta said the chamber expected WPI inflation to remain range-bound due to benign international crude oil prices, comfortable buffer stocks of food-grains and healthy kharif harvest.