Storm Ahead As Monsoon & Market Shocks May Ignite Inflation Surge, Union Bank Says

After cooling off in May, India’s wholesale inflation is expected to have picked up pace again in June 2025. According to a report by Union Bank of India, wholesale price inflation (WPI) likely rose to 0.80% year-on-year in June, up from 0.39% in May, due to a month-on-month increase in food, fuel, and core inflation (excluding excessive volatile commodities i.e., Food and Energy).

The report also mentioned that trade tension, geopolitical uncertainty, and the unpredictable behavior of the monsoon remain key concerns, as they could significantly impact food prices and global commodities, potentially driving inflation.

“June’25 WPI likely spiked due to commodity prices led rise in core inflation, Wholesale Price Index (WPI), as per our projections, reversed from the recent low of 0.39 per cent in May’25 and accelerated to 0.80 per cent (y/y) in June’25” report stated as per ANI.

 Inflation Eases In May

Official data released by the Government of India in last month, showed that WPI had dropped to 0.39% in May, compared to 0.85% in April and 2.74% in May 2024. The decline was driven by lower prices in food items, manufactured products, and fuel. However, industry experts say this easing may have been short-lived.

The Ministry of Commerce and Industry had stated that May’s modest inflation was due to rising prices in categories such as manufactured food products, electricity, chemicals, transport equipment, and non-food articles—despite broader deflation in vegetables and fuel.

Price May Go Higher

Union Bank’s report warned that while the overall WPI inflation remains moderate, several risks could push prices higher in the coming months.

Global commodity price volatility, driven by trade tensions and geopolitical uncertainty, remains a key concern. The report also flagged the monsoon’s progress as a crucial factor—any weather-related disruptions could lead to a spike in agricultural commodity prices.

Food and Fuel Prices: Mixed Signals

According to the report, core WPI inflation rose significanlty from 0.86% in May to 1.63% in June. While food inflation moderated on a year-on-year basis, there was a month-on-month uptick. Food WPI dropped to 0.60% in June from 1.72% in May, indicating some relief for consumers. However, vegetable prices continued to see deflation, falling 21.62% in May after a 18.26% drop in April.

Fuel and power continued in the deflationary path, but the decline slowed. Fuel WPI in June was estimated at -1.82%, compared to -3.87% in May, reflecting a slight firming up of global energy prices.

(With ANI Inputs)

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