The Economy Observer : WPI inflation eased to a 14-month low in Apr`25 By Motilal Oswal Financial Services Ltd
WPI inflation eased to a 14-month low in Apr’25
Moderation in WPI inflation broad-based
* Wholesale Price Index (WPI)-based inflation eased to a 14-month low of 0.9% YoY in Apr’25, lower than 2.0% in Mar’25 and 1.2% in Apr’24. The deceleration was broad-based, mainly led by a decrease in food inflation (lowest in 18 months). Additionally, prices of fuel & power items witnessed a contraction of 2.1% (the lowest in four months). Prices of manufacturing products increased at a slower pace compared to last month (Exhibit 1). Sequentially, WPI dipped 0.2% in Apr’25 vs. 0.3% in Mar’25.
* Food inflation moderated to 2.6% vs. 4.6% in Apr’24, led by a broad-based deceleration. WPI, excluding food, moderated to 0.1% in Apr’25 (lowest in four months) vs. 1.0% growth in Mar’25. (Exhibit 2). Within the food category, prices of primary food articles contracted 1.4% in Apr’25 (first contraction after 21 months of expansion) vs. a growth of 0.8% in Mar’25, while prices of manufactured food products increased 9.5% in Apr’25 vs. 10.7% in Mar’25. Within the primary food articles category, a sharp correction was seen in prices of vegetables, especially tomato, onion, and potato, as well as in the pulses category. Cereal inflation also moderated, led by lower rice prices.
* Fuel and power inflation eased, as crude oil prices remained downbeat. Fuel and power inflation declined by 2.2% in Apr’25, compared with a decline of 0.9% in Apr’24. This was largely driven by a decline in mineral oils, which fell by 5.6% compared with a drop of 0.1% in Apr’24. It must be noted that average international crude oil prices declined by 25.3% in Apr’25 compared with an increase of 6.8% in Apr’24.
* WPI for non-food manufacturing products exhibited a growth of 1.2% in Apr’25 (vs. 1.5% in Mar’25), led by a moderation in the prices of textiles, wearing apparel, basic chemicals, fertilizers, pharmaceuticals, and basic metals.
* Agro inflation came down sharply to -0.5% in Apr’25 from 1.6% in Mar’25, marking its first contraction after 21 months. At the same time, agro-input prices increased 0.7% YoY in Apr’25 vs. an increase of 1.1% YoY in Mar’25. Consequently, the agricultural terms of trade growth contracted 1.1% in Apr’25 (vs. a growth of 0.5% in Mar’25, the lowest in 25 months; Exhibit 4). Prices of imported items increased 0.5% in Apr’25 (2.0% in Mar’25). Additionally, non-agro domestic inflation rose 2.1% YoY in Apr’25 (vs. +2.4% in Mar’25; Exhibit 3).
* Going forward, expectations of a favorable monsoon and softening in global commodity prices will keep inflation in check, and thus we believe that WPI inflation is likely to remain benign in FY26.
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
