Retail inflation for farm, rural worker eases in May
According to the data, the All-India Consumer Price Index for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL) decreased by 2 points and 1 point in May 2025 to stand at 1305 and 1319 points, respectively.
The CPI-AL and CPI-RL were 1307 points and 1320 points in April 2025.
"The year-on-year inflation rates based on CPI-AL and CPI-RL for May 2025 were recorded at 2.84 per cent and 2.97 per cent, respectively, compared to 7.00 per cent and 7.02 per cent in May 2024. The corresponding figures for April 2025 stood at 3.48 per cent for CPI-AL and 3.53 per cent for CPI-RL," said the labour ministry.
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Joydeep has over 25 years of experience in the financial services industry in roles spanning research and advisory. Currently he is on his own, working as a corporate trainer. He has authored four books on fixed income investing and wealth management, which have received accolades from the fraternity. Joydeep writes columns regularly in various financial publications. He is a thought leader in fixed income investing. He runs his own portal Worried about inflation eating into your savings? While official CPI data suggests a moderate 1.55% in July 2025, it's crucial to understand its limitations. The 'base effect' and a generic consumption basket may not accurately reflect your personal inflation rate. This is why you should reach out to a financial planner to help incorporate inflation-related nuances in your financial planning. Tired of too many ads? Remove Ads How is inflation calculated? Tired of too many ads? Remove Ads How should you measure? Professional guidance (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of .) You have heard that inflation reduces the purchasing power of money, which implies you require more money to buy the same amount of goods or services in the future. This is an age-old truth and will remain true in the future as well. Today, we will provide you with some food for thought on how to view gauge inflation, we examine the data reported by the government. The most widely used gauge is consumer price inflation (CPI). Another metric is wholesale price inflation (WPI). We will discuss CPI, as the Reserve Bank of India uses it for policy formulation. The latest declared data is for July 2025, which is 1.55%. With the inflation rate having eased to only 1.55%, does it mean you would inflate your expenses by a more benign number than you thought of earlier? Not examine how inflation is measured and assess the relevance of the data. The rate of price increase is calculated for a defined basket of goods and services. The starting point of the series, which dates back many years to 2012, is set at 100. Over the years, as prices went on increasing, the value of the index increased as well. Currently, the index value is 196.0 in July 2025. Inflation is measured year-on-year: i.e. for July 2025, the index is compared with that of July 2024, which was 193.0, and the outcome is 1.55%. The percentage rise in the index over the course of one year is what is announced, and we react to is a flaw in this method, followed not just in India but all over the world. In this year-on-year computation, the price level of the previous year has a significant impact on the inflation data. Intuitively, when we think of inflation, we think of an increase in current prices. That is, of course, relevant, but the price level of the previous year is as applicable in determining the outcome, e.g., 1.55% in July 2025. This is known as the base effect, where the base (denominator in the equation) influences the data. If inflation was higher in the previous year, and consequently the inflation index was higher, inflation this year is that much lower. And vice other issue is the composition of the basket. Almost half the CPI measurement basket comprises food or food-related items. This would be true for some people who are just above the subsistence level. People who are in a position to save and invest a chunk of their earnings would not need to spend as much on food. The broad issue is that there is only one basket for measurement nationwide. However, the consumption basket of all the 144 crore people of the country is different. It is not possible to have multiple baskets across the country; there are none anywhere in the world. Hence, the available inflation data is the nearest proxy for gauging and incorporating into your financial you look at your consumption basket and measure inflation accordingly. However, it is practically difficult, near-impossible, for individuals to do it consistently. One approach could be to consider the goal you are saving and investing the goal is a child's education abroad, that inflation would be different from the inflation of vegetables in India, a significant variable in the CPI basket. When considering a purchase, such as a house or a car, you can evaluate it accordingly. If you can gather working data on the item you are looking at, you are better off than looking at the generic CPI data of a government-decided with the available data, it is possible to avoid the base-effect flaw by looking at a longer period. 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