India's WPI Inflation Dips Amid Falling Oil and Food Prices

India's Wholesale Price Index inflation is projected to decrease to 2% in February 2025, supported by declining oil and food prices, particularly in vegetables. The Union Bank of India report highlights continued global economic challenges affecting fuel demand and warns of potential disruptions from trade wars and supply chain issues.

India's Wholesale Price Index (WPI) inflation is likely to fall to 2% in February 2025, down from 2.3% in January, driven primarily by decreased oil prices and the seasonal reduction in food costs, according to a Union Bank of India report.

The report emphasizes that the fall in WPI inflation is primarily attributed to an estimated 12% month-on-month drop in vegetable prices, a major factor in food inflation. Meanwhile, edible oil prices saw a minor increase, and manufactured food prices remained stable due to only slight rises in essential inputs like sugar and edible oil.

The fuel index, monitoring petroleum product price changes, is anticipated to stay negative in February after recent increases, attributed to global economic concerns during U.S. President Donald Trump's second term, affecting oil demand. Core WPI, excluding food and fuel, eased due to falling global energy prices; however, rising metal prices tempered the decline.

Given that over 40% of manufacturing raw materials are imported, fluctuations in global commodity prices directly impact domestic inflation. Looking ahead, the report forecasts continued WPI inflation decline due to decreasing fuel and commodity prices and seasonal food price reductions.

However, the report warns of ongoing trade wars and global supply chain disruptions that could influence future price trends, noting that these effects will be closely monitored in the coming months.

(With inputs from agencies.)