New Delhi [India], September 16 : Wholesale Price Index (WPI) inflation in India is expected to remain subdued at 0.5 per cent for the rest of the current financial year, according to a report released by Union Bank of India.
The report highlighted that the WPI is likely to stay in the positive zone for the remainder of FY26, supported by base effects in the core index.
It projected that the base effect would continue to play a crucial role, given that core WPI stood at -0.08 per cent in September 2024.
"We estimate that the WPI is likely to remain in positive zone for the rest of the FY with our projection for FY26 WPI at 0.5 per cent as base effects in core will continue to play a crucial role," the report noted.
Despite the switch from negative levels, WPI is expected to stay soft, assuming commodity prices remain stable and monsoon trends remain favourable.
The subdued WPI is also playing a key role in keeping real manufacturing Gross Value Added (GVA) and overall real GVA/GDP growth elevated by ensuring that the GDP deflator stays low.
The report further said that the benign inflationary outlook could give space for monetary policy easing later in the year.
"We maintain our view of a token 25-50bps rate cut(s) in H2-FY26, as our CPI inflation forecasts are trailing MPC's projections by 30-50bps for the coming quarters (excluding GST impact), with a worsening growth outlook seen post frontload in Q1," the report stated.
On the impact of Goods and Services Tax (GST) reforms, Union Bank of India estimated that inflation could rise by nearly 130 basis points. However, it said only a partial pass-through is expected, with the actual impact likely to be around 60 basis points, assuming anti-profiteering measures remain in place.
Meanwhile, the report pointed out that core WPI has been firming up for the third consecutive month. Core inflation rose sharply to 2.01 per cent in August from 1.20 per cent in July, despite a low base of 0.56 per cent in August 2024. This increase was in line with the monthly gain of 0.47 per cent on a sequential basis.
The sharp uptick was driven by significant increases across several segments. Minerals recorded a substantial jump from 0.09 per cent month-on-month in July to 2.66 per cent in August 2025. Similarly, manufactured sub-segments and non-food articles also registered strong year-on-year spikes.
The report concluded that while WPI inflation will remain in positive territory through FY26, it will stay modest, helping support growth through favourable price dynamics.
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