India’s Wholesale Inflation Slows To Four-Month Low In March

India’s wholesale inflation dropped to a four-month low in March, as food prices increased at a slower pace, according to provisional data released by the Ministry of Commerce & Industry on Monday.

The Wholesale Price Index (WPI)—a key measure of producer-level inflation—rose 2.05% year-over-year in March, down from 2.38% in February.

The figure also came in below the 2.5% forecast in a Reuters poll of economists, signaling a softening inflationary trend.

Food Prices Drive Slowdown

Food inflation, which accounts for 24.38% of the overall WPI basket, increased by 4.66% in March.

This marks a significant deceleration from the 5.94% increase recorded in February.

• Cereal prices rose 5.49%, down from 6.77% in the previous month.
• Vegetable prices posted a deeper contraction of 15.88%, compared to a 5.80% decline in February.
• Fruit prices remained steady, rising 20.78%, nearly unchanged from 20.88% in February.

Aditi Nayar, Chief Economist and Head of Research & Outreach at ICRA Ltd, highlighted the role of food in the inflation drop.

“The dip was largely led by food items, with WPI food inflation cooling to a seven-month low of 4.7%, driven by deeper deflation in vegetables and pulses,” she said.

Looking ahead, Nayar projected that food inflation could ease further to 3–3.5% in April, helped by lower global commodity prices and a favorable base effect.

However, she warned that rising summer temperatures could trigger renewed price pressures later in the month.

RBI’s Policy And Inflation Outlook

The data follows the Reserve Bank of India’s (RBI) decision last week to cut the repo rate by 25 basis points, bringing the total rate reduction in the current cycle to 50 basis points.

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The Monetary Policy Committee (MPC) cited a ‘decisive improvement in the inflation outlook’ as justification, but also flagged risks tied to global uncertainties and weather-related supply disruptions.

Manufacturing And Fuel Prices Show Modest Gains

While food prices moderated, manufacturing costs, which represent roughly 64% of the WPI, rose 3.07% in March, up slightly from 2.86% in February.

This indicates some pricing pressure remains in the industrial sector.

Fuel and power prices also nudged higher by 0.20%, reversing a 0.71% contraction seen in the previous month.

In contrast, primary articles, including crude oil, minerals, and natural gas, registered a 0.76% price increase, a notable slowdown from the 2.81% jump in February.

Non-food articles rose 1.75%, compared to 4.84% in the prior month.

Outlook: Cooling Prices Offer Relief; Risks Remain

With wholesale inflation cooling and food prices softening, policymakers may find greater flexibility to support economic growth. However, the outlook remains sensitive to weather conditions and global market volatility.

If the downward trend continues, it could ease cost pressures for businesses and consumers alike, offering a much-needed boost amid persistent economic uncertainties.