India's wholesale inflation dropped to a 14-month low of 0.39 percent in May, a decrease from 0.85 percent in the previous month, as per government data released on June 16. This marks the third consecutive month of decline in the Wholesale Price Index (WPI).

The data reveals a consistent decrease in inflation following the Consumer Price Index (CPI) also falling to a nearly six-year low of 2.82 percent in the same month. This trend indicates a sustained moderation in food inflation, which has fallen below 1 percent for the first time in almost four years.

Throughout the fiscal year 2024, WPI inflation remained relatively low. Although there was a slight increase in the early part of fiscal year 2025, wholesale price inflation mostly remained below the 3 percent mark for the majority of the year.

The continuous decline in both retail and wholesale inflation has provided the Reserve Bank of India (RBI) with the opportunity to ease monetary policy. The monetary policy committee (MPC) of the RBI implemented a 50 basis points (bps) rate cut earlier this month, following 25 bps reductions in February and April each. As a result, the RBI's repo rate now stands at 5.5 percent, which is one full percentage point lower than at the beginning of 2025.

Economists anticipate further rate cuts in 2025 if disinflation persists. In line with this expectation, the central bank has revised its FY26 inflation forecast to 3.7 percent, down from the earlier projection of 4 percent.