From Manufacturing Strength to Fuel Dip: Unpacking India’s September Wholesale Inflation Surprise

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India’s Wholesale Price Index (WPI) for September 2025 showed a mild inflation of 0.13% year-on-year, below the 0.50% Reuters poll forecast. While manufacturing inflation rose to 2.33%, fuel prices and wholesale food index declined by -2.58% and -1.99% respectively, reflecting divergent sectoral price movements.

India’s Wholesale Price Index (WPI) inflation for September 2025 rose marginally by 0.13% year-on-year, marking a significant moderation compared to earlier estimates and reflecting mixed price trends across key commodity groups. This inflation figure came in below the Reuters poll expectation of 0.50%, highlighting subdued pricing pressures in fuel and food sectors despite elevated manufacturing costs.

Manufactured products, which constitute over half of the WPI basket, recorded an inflation rate of 2.33% year-on-year in September, driven by steady industrial input costs and supply chain adjustments. By contrast, the fuel price index contracted by -2.58%, signaling easing energy prices likely influenced by global crude stabilization and domestic policy factors.

Food prices at wholesale levels similarly declined by -1.99%, reinforcing a benign inflation environment in the agrarian segment. This deflation in food prices contrasts with recent trends of rising consumer food inflation, pointing to complex supply-demand dynamics and buffer stocks.

Revised data for July showed the WPI inflation at -0.58%, reflecting significant downward revisions based on updated commodity price surveys and seasonal factors. The persistent softness in wholesale prices indicates restrained producer price pressure for the moment.

Overall, the WPI inflation trajectory highlights ongoing moderation in input costs for fuel and food, balancing out pressure from the manufacturing sector. Policymakers monitor these indicators closely for implications on consumer price inflation and monetary policy stance.

Notable Updates

Manufacturing Inflation: 2.33% y/y in September, up from previous months
Fuel Price Inflation: -2.58% y/y, showing notable contraction
Wholesale Food Index: -1.99% y/y, declining after prior volatility
July WPI Inflation: Revised to -0.58% y/y from earlier estimates
Overall WPI Inflation: 0.13% in September, below consensus forecasts
Market Reaction: Signals easing input cost pressures amid uncertain global commodity outlook

Major Takeaways

The divergence between manufacturing inflation and falling fuel and food prices reflects sector-specific supply-demand conditions.
Lower fuel prices may ease transportation and production costs, potentially benefiting downstream consumer prices.
Mild food price deflation at wholesale level offers some relief but consumer prices remain a watchpoint.
July’s downward WPI revision signals volatility in price data reporting and the need for cautious trend interpretation.

India’s Wholesale Price Index suggests a complex inflation backdrop with mixed signals ahead, requiring careful policy calibration to balance growth and price stability.

Sources: Office of Economic Adviser India, Reuters Poll

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