India's retail inflation drops to a multi-year low of 2.10% in June
'Year-on-year inflation rate based on All India Consumer Price Index (CPI) for the month of June 2025 over June 2024 is 2.10% (Provisional),' said the ministry, underscoring that the headline inflation hit the lowest year-on-year rise since January 2019.
The drop in the retail inflation rate below the Reserve Bank of India's tolerance band could support an interest rate cut. Experts believe that the June 2025 CPI data has increased the probability of an RBI rate cut in the October policy announcement.
'Overall, the June CPI inflation print, along with the deflation in June WPI inflation, provides ample room for the RBI to lower the repo rate. The average CPI inflation in FY2026 is likely to be much lower than the RBI's estimate of 3.7%. We continue to expect the RBI to pause in the August policy as it watches the monsoon outturn to ascertain the durability of food inflation trends,' said Suvodeep Rakshit, Chief Economist at Kotak Institutional Equities.
Rakshit is expecting an RBI rate cut of 25 basis points in the October MPC policy announcement.
1. Food Inflation: India's food inflation dropped to its lowest level since January 2019, into the negative zone of (-1.06%), as per the June 2025 data released, compared YoY with the same period a year ago.
The ministry attributed the drop in food inflation to the decline in prices of vegetables, pulses, meat, and cereal, among other products.
'The significant decline in headline inflation and food inflation during the month of June, 2025 is mainly attributed to favourable base effect and decline in inflation of Vegetables, Pulses and Products, Meat and Fish, Cereals and products, Sugar and confectionery, Milk and products and Spices,' the ministry said in the official statement.
2. State-wise inflation ranking: Kerala, Punjab, Jammu and Kashmir (J&K), Uttarakhand, and Haryana ranked the top five states with the highest year-on-year inflation for June 2025.
Kerala at 6.71%, Punjab at 4.67%, J&K at 4.38%, Uttarakhand at 3.4%, and Haryana at 3.10% were the top five states, according to the MoSPI data released.
3. Health Inflation: The health inflation rate on a year-on-year (YoY) basis for June 2025 was 4.43%. The inflation rate jumped 9 basis points to its current levels, compared on a sequential basis with the 4.34% in May 2025 for both the rural and urban sectors combined.
4. Education Inflation: The education inflation data showed a rate of 4.37% year over year. However, the data also highlighted that on a month-on-month (MoM) basis, the education inflation in India witnessed a 25 basis point rise to its latest levels, compared to 4.12% in May 2025 for both the rural and urban sectors combined.
5. Rural & Urban Inflation: The released inflation data showed a sequential decline in both rural and urban inflation rates compared to the May 2025 data.
According to the MoSPI data, headline rural inflation dropped to 1.72% in June, compared to 2.59% in May. Meanwhile, the urban inflation rate also dropped to 2.56% in June, compared on a sequential basis with 3.12% in May.
The inflation data, or CPI data, is released on the 12th of every month. If it is a weekend or a holiday, the release is shifted to the next working day.
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