Cost Of Living Drops: Wholesale Inflation At Lowest Level In Over A Year

The figure marked a further decline from April’s 0.85 per cent and 2.05 per cent recorded in March, underscoring a softening price trend in key sectors of the economy.

The Consumer Price Index (CPI)-based inflation stood at 2.82 per cent in May 2025, marking its lowest level since February 2019.

Source : ABPLIVE AI

India’s wholesale inflation continued its downward trajectory in May, touching a 14-month low of 0.39 per cent, according to data released by the Ministry of Commerce and Industry on Monday.

The figure marked a further decline from April’s 0.85 per cent and 2.05 per cent recorded in March, underscoring a softening price trend in key sectors of the economy, reported IANS.

On a monthly basis, WPI inflation turned negative, registering a decline of (-) 0.06 per cent compared to April. This was largely driven by reduced prices in both food items and fuel products, including petrol and diesel, during the month.

Retail Prices Follow Suit with Sharp Decline in CPI and Food Inflation

Simultaneously, retail inflation has also cooled. The Consumer Price Index (CPI)-based inflation stood at 2.82 per cent in May 2025, marking its lowest level since February 2019. Food inflation was especially subdued, dropping to 0.99 per cent—its lowest point since October 2021. This is the seventh consecutive month of falling food inflation, supported by rising agricultural output across the country.

As inflationary pressures ease, the Reserve Bank of India has responded with a more dovish monetary policy stance. Inflation has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of a broad-based moderation, noted RBI Governor Sanjay Malhotra.

RBI Cuts Key Rates, Projects Lower Inflation Ahead

Reflecting this disinflationary trend, the RBI revised its inflation projection for 2025-26 to 3.7 per cent, down from its earlier forecast of 4 per cent. The central bank also announced a 50 basis point cut in the repo rate, bringing it down from 6 per cent to 5.5 per cent in its latest monetary policy review, with the aim of spurring economic growth.

To support liquidity in the banking system, the RBI has also initiated a phased reduction in the Cash Reserve Ratio (CRR), slashing it by 100 basis points from 4 per cent to 3 per cent. This adjustment will be implemented in four stages of 25 basis points each and is expected to infuse Rs 2.5 lakh crore into the financial system.

"The near-term and medium-term outlook now gives us the confidence of not only a durable alignment of headline inflation with the target of 4 per cent, as exuded in the last meeting, but also the belief that during the year, it is likely to undershoot the target at the margin,” Malhotra added.