Wholesale inflation in April has fallen to a 13-month low. Relief was also seen in food inflation, which decreased from 1.57% in March to just 0.86% in April. This decline now provides the Reserve Bank of India (RBI) with a b basis for a repo rate cut in its June monetary policy review, increasing the likelihood of relief in loan EMIs for the general public.
New Delhi: Reassuring news has emerged on the inflation front. In April, inflation based on the Wholesale Price Index (WPI) fell to 0.85%, the lowest level in the last 13 months. This decline was primarily due to a decrease in the prices of food items, fuel, electricity, and manufactured products.
According to government data, the rate was 2.05% in March, while in April 2024 it was 1.19%. According to the Ministry of Industry, although there was a slight increase in prices in some sectors such as food products, chemicals, machinery, and other manufactured goods, the overall softening of prices suppressed wholesale inflation.
Due to this decline, it is now expected that the Reserve Bank of India may decide to cut the repo rate in the upcoming monetary policy review, which could directly impact loans and EMIs.
Retail Inflation Relief Fuels Expectations of Repo Rate Cut in June
The decline in retail inflation in April is a positive sign for the Reserve Bank of India (RBI). Due to softening prices of vegetables, fruits, and pulses, retail inflation in April fell to 3.16%, the lowest level in almost six years. This is the lowest inflation rate since July 2019. In March 2025, the rate was 3.34%, and in April 2024, it was 4.83%.
With this decline, the scope for the RBI to cut the repo rate in the June monetary policy review has strengthened. Earlier, in its previous policy, the RBI had reduced the repo rate by 0.25% to 6%. Experts believe that this potential cut in monetary policy could further strengthen economic recovery and growth.
Significant Relief in Food Inflation, Further Positive Expectations from Monsoon
Relief has been seen in the prices of food items in April. Food inflation fell to 0.86%, compared to 1.57% in March. Significant declines were recorded in the prices of onions, fruits, potatoes, and pulses. Onion inflation, which was 26.65% in March, fell to just 0.20% in April. Fruit inflation also decreased from 20.78% to 8.38%. Similarly, a decrease of 24.30% in potato prices and 5.57% in pulse prices was observed.
Vegetable prices saw a slight increase, with inflation reaching 18.26%, up from 15.88% in March. Fuel and electricity prices also saw a 2.18% decrease, compared to only 0.20% in March. Manufactured products inflation fell to 2.62% in April, down from 3.07% the previous month.
According to Barclays, a favorable base effect will continue to impact wholesale inflation in the coming months, keeping it at lower levels. Meanwhile, Rahul Agrawal, Senior Economist at ICRA, believes that the early onset of the monsoon in Kerala and expectations of a better-than-normal monsoon are positive for crop production, which could further control food inflation in the future.
