WPI Falls to 0.85%—Disinflation Strengthens Case for June Rate Cut, Says MP Financial’s Mahendra Patil

WPI Falls to 0.85%—Disinflation Strengthens Case for June Rate Cut, Says MP Financial’s Mahendra Patil

By- Mahendra Patil, Founder and Managing Partner, MP Financial Advisory Services LLP for your kind perusal.

“India’s inflation landscape has turned benign, with retail inflation (CPI) moderating to a near six-year low of 3.16% in April 2025 and wholesale inflation (WPI) plunging to just 0.85%. This dual disinflation, led by a sharp correction in food prices and easing fuel and primary article costs, offers a substantial macroeconomic tailwind. With food inflation at the consumer level down to 1.78% and WPI food inflation easing to 2.55%, the pricing environment is increasingly favorable for rural consumption recovery.

This broad-based softening in inflation, particularly at the wholesale level, strengthens the case for the Reserve Bank of India to continue the rate cut cycle in the June policy meeting as well. Such a move would lower borrowing costs, revive capex appetite among corporates, and offer rate-sensitive sectors such as housing, automobiles, and MSMEs a timely boost.

However, the mild uptick in core inflation segments like health (4.25%), education (4.13%), and housing (3%) suggests services inflation remains sticky. Nonetheless, the current environment is ideal for a calibrated monetary stimulus to revive growth amid global trade uncertainties and moderate commodity prices. Lower input cost inflation as reflected in the WPI will also help firms protect margins without hiking prices, thereby supporting profitability and private sector investment momentum.”