Economists predict WPI inflation to remain largely flat over FY26

As per the data released by the Ministry of Commerce and Industry, the WPI inflation in November rose to -0.32% against -1.21% in October.

The decrease was primarily driven by decrease in prices of food articles, mineral oils, crude petroleum and natural gas, the manufacture of basic metals and electricity.

Aditi Nayar, Chief Economist, ICRA Ltd expects the WPI to move into a YoY inflation of around 0.5% in December 2025, and subsequently average above 1.5% in Q4 FY2026.

"With the further depreciation in the INR, hardening commodity prices, and unseasonal rise in vegetable prices, and despite softening crude oil, we expect the WPI to move into a YoY inflation of around 0.5% in December 2025, and subsequently average above 1.5% in Q4 FY2026," she said.

"This will aid in a slight normalization in the GDP deflator going ahead. The WPI is now likely to average around 0.4% in FY2026."

Sonal Badhan, Economist at Bank of Baroda, said, "Within food, vegetable, fruits and spices helped drag the index down, while milk inflation increased. Food grain inflation remains muted, led by pulses. Amongst cereals, wheat prices fell more steeply in Nov'25, and paddy price index also cooled."

"Under manufactured products, softness in inflation was driven by items like basic metals, computers/electronics, chemicals/leather products, food and beverages--continuing to reflect the impact of GST rate cuts and weak international commodity prices," she added.

Sonal mentioned that globally, prices of Lead and Copper are showing upside pressures. In contrast, oil prices continue to decline at similar pace in Dec'25 as well, driven by supply side concerns.

"However, possibility of higher growth in the US next year (Fed's revised projections) may push commodity prices higher and pressure on rupee may exert some upward pressure on fuel inflation in the coming months," she said.

Rajani Sinha, Chief Economist, CareEdge Ratings said, "While food prices continued to remain in deflation, elevated edible oil inflation limited further easing in overall food inflation. This remains a key area to monitor amid weak kharif oilseed sowing and elevated global prices of edible oils. Additionally, the government's decision to impose a 30% import duty on certain pulses is expected to lend support to prices in the segment."

"On the external front, global commodity prices are expected to remain broadly benign, supported by oversupply in the global crude oil market and excess capacity in China. However, several base metals, including copper, tin, and aluminium, along with precious metals such as gold and silver, have witnessed sharp price increases."

"These gains have been driven by strong industrial demand from the renewable energy and AI sectors, US Federal Reserve rate cuts, and expectations of fiscal stimulus in China. Movements in global base metal prices remain a key monitorable," she said.

"Overall, WPI inflation appears to have bottomed out in October and is expected to remain largely flat over FY26."

Recently, India has reported spike in the retail inflation or Consumer Price Index (CPI) to 0.71% in November 2025, marking an increase of 46 basis points compared to October 2025.

The rise in inflation was driven primarily by higher prices of vegetables, eggs, meat and fish, spices, and fuel and light.

While announcing the monetary policy decision, the RBI Governor Sanjay Malhotra had characterised India's current macroeconomic moment as a "rare goldilocks period", that currently marks high economic growth and exceptionally low inflation. (ANI)