NEW DELHI— India’s retail inflation, measured by the Consumer Price Index (CPI), dropped sharply to 2.1% in June 2025—the lowest level since January 2019, according to data released by the Ministry of Statistics on Monday.
This marks a 72 basis point decline from May’s inflation rate of 2.82%, reflecting broad-based moderation in prices, particularly in food items.
Food inflation entered negative territory for the first time in recent years, with an annual rate of -1.06% in June. This represents a steep fall of 205 basis points from May, and is also the lowest food inflation figure recorded since January 2019.
The dramatic easing in inflation was largely driven by significant price declines in key food categories:
- Vegetables: down 19% year-on-year
- Pulses: down 11.76%
- Meat and fish: down 1.62%
- Spices: down 3.03%
These falling food prices helped bring the overall CPI inflation well below the Reserve Bank of India’s (RBI) 4% target.
As a result of the sustained disinflationary trend, the RBI recently revised its CPI inflation forecast for FY 2025–26 downward—from 4% to 3.7%. The new quarterly projections are:
- Q1: 2.9%
- Q2: 3.4%
- Q3: 3.9%
- Q4: 4.4%
“Inflation has softened significantly over the last six months, falling from above the tolerance band in October 2024 to well below the target,” said RBI Governor Sanjay Malhotra. “We now have confidence in a durable alignment of headline inflation with our 4% goal—and even expect a marginal undershooting over the course of the year.”
Malhotra noted that while food inflation remains soft, core inflation is also expected to stay benign due to easing global commodity prices and a projected slowdown in global growth.
The sharp drop in inflation has given the RBI space to ease monetary policy. In its last monetary policy review, the central bank:
- Cut the repo rate by 50 basis points, from 6% to 5.5%
- Lowered the Cash Reserve Ratio (CRR) by 100 basis points, from 4% to 3%, to be implemented in four tranches of 25 basis points each
The CRR cut is expected to inject ₹2.5 lakh crore into the banking system, boosting liquidity and improving credit availability for businesses and consumers.
These accommodative measures are intended to support economic growth by lowering borrowing costs and making credit more accessible amid a favorable inflation backdrop. (Source: IANS)
