Updated 14 July 2025 at 16:59 IST
India’s CPI Inflation Cools to Six-Year Low of 2.10% in June on Falling Food Prices, Base Effect
India’s retail inflation dropped sharply to 2.10% in June 2025, the lowest in six years, as food prices turned negative and a favourable base effect kicked in. The reading bolsters expectations of further RBI rate cuts.
India’s retail inflation, measured by the Consumer Price Index (CPI), fell sharply to 2.10% in June 2025, marking a six-year low. The drop from May’s 2.82% reading was driven by a favourable base effect and a broad decline in food prices, according to data released by the Ministry of Statistics and Programme Implementation on Monday.
This is the lowest year-on-year CPI inflation rate since January 2019. The significant decline in headline inflation comes as food prices entered deflationary territory: the Consumer Food Price Index (CFPI) posted a year-on-year rate of -1.06% for June. Rural food inflation was provisionally at -0.92%, while urban areas saw an even steeper drop to -1.22%.
Food inflation overall declined by 205 basis points compared to May, with prices of key items like vegetables, pulses, meat, cereals, sugar, milk and spices easing. Vegetable inflation plunged to -19.00% in June from -13.70% in May, while pulses and products fell to -11.76% from -8.22% over the same period.
Headline rural inflation moderated to 1.72% in June from 2.59% in May, while urban inflation dropped from 3.12% to 2.56%.
Non-food categories remained mixed: housing inflation rose slightly to 3.24% in June from 3.16% in May, while clothing and footwear inflation eased to 2.55%. Health inflation held at 4.43%, and education inflation was 4.37%. Fuel and light inflation was recorded at 2.55%.
Economists say the sharp disinflationary trend strengthens the case for monetary easing. Radhika Rao, Executive Director and Senior Economist at DBS Bank, noted that despite some sequential uptick in perishables like vegetables, the overall food basket stayed on a disinflationary path led by cereals and pulses.
“Core-core readings also remained benign, reflecting slack in the economy, which is mirrored in the sub-1% core non-food manufacturing WPI inflation. The weak June CPI reading will feed expectations that the RBI’s Monetary Policy Committee could consider further rate cuts in this cycle,” Rao added.
The sharp fall in inflation aligns with the Reserve Bank of India’s target of keeping CPI inflation near 4%, offering policy space to support growth if needed.
Published By : Rajat Mishra
Published On: 14 July 2025 at 16:59 IST