Retail Inflation Hits Over Six-Year Low Aided by Easing Food Prices
Due to favorable base effects and a slowdown in food price increases, India's retail inflation dropped to 2.10 percent in June, a six-year low, according to government data.
This is the eighth consecutive month that inflation has remained below the Reserve Bank of India's (RBI) upper tolerance range of six percent and the fifth consecutive month that it has remained below the RBI's medium-term target of four percent.
June 2025 headline inflation is 72 basis points lower than May 2025 headline inflation.
According to the data, it is the lowest annual inflation rate since January 2019.
Inflation was below three percent in June for the second consecutive month. In June 2024, retail inflation was 5.08 percent, down from 2.82 percent in May.
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Inflation for food, which makes up about half of the Consumer Price Index (CPI) basket, decreased from 0.99 percent in May to -1.06 percent in June.
Lower costs in important categories like vegetables, pulses, meat and fish, cereals, sugar, milk, and spices, as well as a favorable base effect, were major factors in the drop.
Rural and urban areas had corresponding inflation rates of -0.92 percent and -1.22 percent, respectively.
According to the data, June 2025 saw the lowest level of food inflation since January 2019.
The information was released one month after the RBI's Monetary Policy Committee (MPC) lowered the benchmark repo rate for the third time this year, by 50 basis points to 5.5 percent.
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To signal a more balanced approach to growth and inflation moving forward, the policy stance was changed to "neutral."
The central bank lowered its CPI inflation estimate for FY26 from its initial April estimate of four percent to 3.70 percent. The current quarter-by-quarter breakdown is as follows: 2.9 percent in Q1, 3.4 percent in Q2, 3.5 percent in Q3, and 4.4 percent in Q4.
“Inflation has softened significantly over the last six months from above the tolerance band in October 2024 to well below the target, with signs of broad-based moderation,” RBI Governor Sanjay Malhotra said in his post-policy address.