India’s Wholesale Inflation Dips Again Amid GST Cuts and Softer Global Prices

Wholesale Price Inflation (WPI) fell to a 27-month low of (-) 1.21 percent in October, mainly because of a sharp drop in prices of food items like pulses and vegetables, as well as lower fuel and manufactured goods prices, according to government data released on Friday. WPI inflation was 0.13 percent in September and 2.75 percent in October last year.

The industry ministry said the negative inflation rate in October 2025 was mostly due to falling prices of food articles, crude petroleum and natural gas, electricity, mineral oils, and basic metals. WPI data shows food articles had a deflation of 8.31 percent in October, compared to 5.22 percent in September, with onion, potato, vegetables, and pulses all seeing price drops. Vegetables saw a deflation of 34.97 percent in October, compared to 24.41 percent in September. Pulses had a deflation of 16.50 percent, while potato and onion saw deflation of 39.88 percent and 65.43 percent, respectively.

For manufactured products, inflation eased to 1.54 percent from 2.33 percent in September. Fuel and power had negative inflation of 2.55 percent, compared to 2.58 percent in September, marking a decline for seven straight months.

Looking ahead, a favorable base effect is expected to keep the wholesale index in deflation for the rest of FY26. Ind-Ra expects wholesale deflation in November 2025 to be below 1 percent, said Paras Jasrai, Associate Director at India Ratings and Research. The drop in WPI inflation was expected after GST rates were cut starting September 22.

GST rates on everyday items were reduced as part of tax rationalization, moving from a four-tier system to just two slabs of 5 and 18 percent. These tax cuts, along with last year’s favorable inflation base, have lowered both wholesale and retail inflation. Data released last week showed retail inflation hit an all-time low of 0.25 percent in October, driven by GST cuts and last year’s high base. In September, retail inflation was 1.44 percent.

The Reserve Bank of India (RBI), which tracks retail inflation, kept policy rates unchanged at 5.5 percent last month. The drop in both retail and WPI inflation could pressure the RBI to cut interest rates at its next policy review meeting on December 3-5. Jasrai said, however, that based on India’s economic growth trend, the case for monetary easing is not very strong.

FY26 retail inflation is now expected to fall to around 2.5 percent. However, to prevent the economy from slowing further, the RBI may consider a 25-50 basis point cut in the repo rate in its December 2025 policy, he added. Ranjeet Mehta, CEO & Secretary General of PHDCCI, said the chamber expects WPI inflation to stay stable due to low international crude oil prices, good buffer stocks of food grains, and a healthy kharif harvest.