According to a report by Union Bank of India, wholesale inflation in India is expected to have increased to 0.80% year-on-year in June 2025, up from 0.39% in May. This surge is attributed to a rise in food, fuel, and core inflation. The core Wholesale Price Index (WPI), which excludes food and fuel, jumped sharply from 0.86% in May to 1.63% in June. The report notes that commodity prices led to an increase in core inflation, contributing to the rise in WPI.
While food inflation decreased on a yearly basis, it saw an uptick on a month-on-month basis. The food WPI eased to 0.60% in June from 1.72% in May. On the other hand, fuel inflation remained in the deflationary zone, but the pace of contraction slowed, with fuel WPI likely at -1.82% in June compared to -3.87% in May.
The report highlights several risks that could push inflation higher in the coming months. Global commodity prices are expected to stay volatile due to uncertainties around tariff wars and ongoing geo-political tensions. Ample global supply and weak demand may limit the upside, but any further escalation in conflicts or trade-related tensions could impact price stability.
Additionally, agricultural commodity prices could remain uncertain depending on the progress of the monsoon. Weather-related disruptions and any geopolitical developments affecting the supply chain in agriculture may pose short-term upside risks to wholesale inflation. The report concludes that while wholesale inflation likely remained moderate in June, the outlook remains uncertain due to potential risks from global and weather-related factors.
The increase in wholesale inflation is a concern for the Indian economy, as it could lead to higher prices for consumers and impact the country’s growth. The report’s findings suggest that the Reserve Bank of India (RBI) may need to monitor inflation closely and adjust its monetary policy accordingly to maintain price stability. Overall, the report provides a cautionary note on the outlook for wholesale inflation in India, highlighting the need for vigilance and proactive policy measures to mitigate potential risks.