India’s wholesale price inflation, known as WPI, looks set to stay low at around 0.5% for the rest of the financial year, according to a fresh report from Union Bank of India. This positive outlook comes as good news for the economy, with WPI expected to remain in the green zone through FY26, thanks to helpful base effects in the core index.
The report points out that core WPI was at a slight minus of -0.08% in September 2024, setting the stage for these base effects to keep things steady. “We estimate WPI will stay positive for the rest of the FY, with our FY26 projection at 0.5% as base effects in core continue to play a key role,” the report notes. Even as it moves away from negative territory, WPI inflation should remain soft, provided commodity prices don’t spike and the monsoon delivers good rains.
This low WPI is boosting real manufacturing growth and overall GDP, as it keeps the GDP deflator in check. Plus, the calm inflation scene could open the door for the Reserve Bank of India to ease interest rates later this year. The bank sticks to its call for a small 25-50 basis points rate cut in the second half of FY26, especially since their CPI inflation forecasts are lower than the Monetary Policy Committee’s by 30-50 basis points in coming quarters. They also note a slowdown in growth after a strong start to the year.
On the flip side, upcoming GST reforms could push inflation up by about 130 basis points, but Union Bank expects only a partial hit—around 60 basis points—if anti-profiteering rules stay strong.
Looking at recent trends, core WPI has been picking up for three months straight. It jumped to 2.01% in August from 1.20% in July, beating the low base of 0.56% from last year. This rise matched a 0.47% monthly increase, driven by big gains in areas like minerals (from 0.09% to 2.66% month-on-month), manufactured goods, and non-food articles.
Overall, the report wraps up that WPI inflation will hover positively but modestly through FY26, creating a supportive environment for economic growth with stable prices.
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