Weekly Economic Outlook: June 16-22, 2025
- Remin Francis I R
- Jun 23
- 2 min read
This week, India’s economic landscape presented a mix of encouraging trends and ongoing challenges. Wholesale price inflation in May 2025 eased significantly to 0.39%, a sharp drop from 0.85% in April and below the expected 0.80%. This marks the lowest inflation rate since March 2024, driven largely by a slowdown in food price growth. Food inflation moderated to 1.72% from 2.55% in the previous month, with a sharp 21.62% drop in vegetable prices playing a key role. Pulses continued their decline with a -10.41% dip, while cereal prices saw a slower increase at 2.56%, with wheat prices up 5.75%. Fuel prices also contributed to the easing of inflation, dropping 2.27%, marking a second consecutive month of declines, driven by lower petrol and HSD prices.
In the manufacturing sector, inflation slowed to 2.04% from 2.62% in April, reflecting weaker price growth across various components such as paper products, food products, and rubber. These subdued manufacturing inflation figures suggest a moderation in production costs, helping to alleviate some pressure on the overall price level. On the trade front, India recorded a trade deficit of $21.88 billion in May 2025, which is slightly lower than the $23.8 billion deficit from the same month in 2024. While imports fell by 1.7%, exports dipped by 2.2%, although exports to the US showed resilience with a 21.7% increase, reflecting that the impact of tariff-related uncertainties has been somewhat contained.
Passenger vehicle sales in India saw a modest 0.8% year-on-year growth to 303,099 units in May 2025, continuing an eight-month streak of positive sales, though the growth pace was the slowest observed in months. Experts are hopeful that the RBI’s rate cuts and the forecast of above-normal monsoons will boost consumer sentiment and improve affordability, particularly for the auto sector.
Globally, the Federal Reserve held its interest rate steady at 4.25%– 4.50%, as policymakers continue to navigate the economic effects of US domestic policies. The Bank of England also kept rates unchanged at 4.25%, maintaining a cautious approach amidst persistent inflationary pressures, especially from rising energy prices. Meanwhile, Japan’s inflation rate edged down to 3.5%, marking a slight improvement but still posing concerns for consumer spending.
Finally, India’s foreign exchange reserves saw a slight increase to $698.95 billion by June 13, 2025, from $696.66 billion the previous week. This steady rise in reserves strengthens India’s financial position to weather external economic shocks. Overall, while challenges remain, especially with inflationary pressures and global uncertainties, there are positive signs in areas such as trade resilience and foreign exchange reserves, offering some optimism for the coming months.
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