India experienced a notable drop in wholesale inflation in April 2025, with the Wholesale Price Index (WPI)-based inflation easing to 0.85 per cent from 2.05 per cent recorded in March. This data, released on Wednesday by the Ministry of Commerce and Industry, highlights a sharp downward shift driven primarily by declining prices in the fuel and power and primary articles categories.
The significant drop in prices reflects global energy market trends and domestic policy measures aimed at controlling energy costs. Similarly, primary articles, which include food items and raw materials, saw a decrease in prices due to factors such as improved domestic production and favorable climatic conditions.
Despite these declines, the manufacturing sector exhibited resilience, maintaining stable prices in various sub-sectors. This indicates that while input costs have softened, demand in the manufacturing sector remains robust, supporting overall economic stability.
Retail Inflation
India's retail inflation, measured by the Consumer Price Index (CPI), fell to 3.16 per cent in April 2025, marking the lowest year-on-year inflation rate since July 2019. This decline represents an 18 basis point drop from March 2025's inflation rate and is largely attributed to a slowdown in food price increases. Key contributors to this moderation included vegetables, cereals, pulses, and personal care items. Despite severe heat waves affecting certain regions, a strong harvest season helped mitigate potential food shortages, leading to lower food prices.
The moderation in retail inflation is expected to have positive effects on household budgets, increasing disposable income and potentially boosting consumer spending. This trend is also anticipated to influence the Reserve Bank of India's (RBI) monetary policy decisions in the coming months.
RBI's Inflation Forecast For FY26
During its April bi-monthly policy meeting, the Reserve Bank of India (RBI) projected Consumer Price Index (CPI)-based inflation for the financial year 2025–26 (FY26) at 4.2 per cent, assuming a normal monsoon season. The central bank provided a quarter-wise forecast, estimating inflation at 4.5 per cent in the first quarter, 4.0 per cent in the second, 3.8 per cent in the third, and rising slightly to 4.2 per cent in the final quarter of the fiscal year.
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