Wholesale inflation moderates to 9.78% in July
Wholesale Price Index (WPI)-based inflation moderated to 9.78% in July 2026, down marginally from 9.87% in June
The moderation was driven by a sharp easing in the Fuel and Power segment, whose inflation fell to 20.05% in July from 27.41% in June
Manufactured Products inflation rose to 8.29% in July from 7.48% in June, and core WPI (which excludes volatile food and fuel components) climbed to a series-high 8.2%, with 16 of 21 sub-sectors recording higher price prints
Food inflation within the WPI basket touched a 19-month high of 6.65% in July (up from 6.1% in June), led by manufactured food products and primary food articles
Wholesale Price Index — Methodology and the 2022-23 Base Year Revision
The WPI measures average change in prices of goods at the wholesale (first) level of transaction, before they reach retail consumers. It is compiled by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, and released monthly.
Key Details
- The WPI series was recently rebased from 2011-12 to 2022-23, with the revised series released on 15 June 2026 (for May 2026 data), expanding the basket from 697 to 957 commodities
- WPI is a Laspeyres-type fixed-weight index; weights are derived from net traded value of items in the base year rather than consumption expenditure (unlike CPI)
- Under the earlier 2011-12 series, Primary Articles carried roughly 22.6% weight and Fuel & Power roughly 13.2%, with Manufactured Products carrying the largest share (~64%)
- Unlike CPI, WPI does not directly cover services and is not used by the RBI for inflation targeting
The July 2026 WPI print is among the first readings published under the new 2022-23 base series, meaning both the headline moderation and the sub-index movements (Fuel & Power, Manufactured Products, core WPI) reflect the revised, wider commodity basket rather than the older 2011-12 series.
Core Inflation and Its Significance for Monetary Policy
Core inflation strips out the most volatile components — food and fuel — to isolate the "underlying" or demand-driven price trend. In India, core WPI inflation typically excludes the Primary Articles and Fuel & Power groups, while core CPI inflation excludes food, beverages, and fuel & light.
Key Details
- A rising core inflation alongside falling headline inflation (as seen in July 2026) signals that price pressures are shifting from volatile, supply-side categories to broader, demand-driven manufacturing costs — a trend monetary authorities watch closely
- The RBI's flexible inflation-targeting (FIT) framework, however, is statutorily anchored to headline CPI (Combined), not WPI, under Section 45ZA of the RBI Act, 1934 (inserted via the Finance Act, 2016), with a target of 4% inflation within a ±2% tolerance band
- The Monetary Policy Committee (MPC), a six-member body (three RBI + three government-nominated members), sets the policy repo rate based on this CPI-anchored target
- A persistently elevated core WPI can act as a leading indicator that eventually feeds into retail (CPI) inflation with a lag, even though WPI itself is not the direct policy target
Although WPI is not the RBI's formal inflation target, a series-high core WPI print alongside easing headline WPI is a signal analysts use to anticipate future pipeline pressure on retail inflation and, by extension, on MPC policy stance.
WPI vs CPI — Two Different Inflation Baskets
India tracks two principal inflation gauges — WPI (wholesale, producer-level) and CPI (retail, consumer-level) — that can diverge sharply, as seen when WPI eases while core/manufactured components harden.
Key Details
- CPI (Combined) itself was rebased in 2026 to base year 2024=100, replacing the 2012 series, with weights drawn from the Household Consumption Expenditure Survey (HCES) 2023-24
- Under the new CPI series, the weight of Food and Beverages fell to 36.75% (combined index) from 45.86% under the 2012 series, and the classification now follows the UN's COICOP 2018 framework
- WPI captures price changes before taxes and margins are added, and excludes services entirely, whereas CPI captures retail prices paid by end consumers, including services
- WPI is used mainly to deflate national income aggregates (e.g., GDP deflator components) and to track producer-level cost pressures, not for setting the RBI's policy rate
A moderating WPI headline does not automatically translate into cooler retail (CPI) inflation for consumers — the divergence between softer wholesale fuel prices and hardening wholesale manufacturing costs is a distinct signal from what the RBI's CPI-based inflation target captures.
- WPI inflation: 9.78% in July 2026, down from 9.87% in June 2026
- Fuel and Power inflation: eased to 20.05% in July from 27.41% in June
- Manufactured Products inflation: rose to 8.29% in July from 7.48% in June
- Core WPI inflation: series-high of 8.2% in July, up from 7.5% in June; 16 of 21 sub-sectors saw higher prints
- WPI food inflation: 19-month high of 6.65% in July, up from 6.1% in June
- WPI base year revised from 2011-12 to 2022-23 (new series released 15 June 2026); basket expanded from 697 to 957 items
- CPI (retail) base year separately revised to 2024=100, using HCES 2023-24 weights
- RBI's statutory inflation target: 4% CPI inflation with a ±2% band, under Section 45ZA of the RBI Act, 1934