India's retail inflation falls to over 6-year low of 2.1 pc in June

Hans India

14-07-2025

India's inflation rate based on the Consumer Price Index (CPI) eased further to 2.1 per cent in June this year compared to the same month of the previous year. This is the lowest level of retail inflation since January 2019, according to a statement issued by the Ministry of Statistics on Monday.
There is also a drop of 72 basis points in retail inflation during June, in comparison to the corresponding figure of 2.82 per cent for the previous month of May.
There was a decline in the prices of food products during the month, with the annual food inflation rate at -1.06 per cent. There was also a sharp fall of 205 basis points in food inflation in June 2025 in comparison to May 2025. The food inflation in June 2025 is the lowest after January 2019, according to the official figures.
The significant decline in inflation during the month is mainly attributed to the decline in prices of vegetables, pulses, meat and spices.
The prices of vegetables declined by as much as 19 per cent during the month, while the prices of pulses came down by 11.76 per cent. The prices of meat and fish also fell by 1.62 per cent, while spices turned cheaper by 3.03 per cent. The decline in prices brought food inflation into the negative zone for the first time.
Meanwhile, the RBI has also revised its inflation outlook for 2025-26 downwards from the earlier forecast of 4 per cent to 3.7 per cent, Reserve Bank Governor Sanjay Malhotra said recently.
CPI inflation for the financial year 2025-26 is now projected at 3.7 per cent, with Q1 at 2.9 per cent, Q2 at 3.4 per cent, Q3 at 3.9 per cent, and Q4 at 4.4 per cent.
He pointed out that 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 a broad-based moderation. The near-term and medium-term outlook now gives us the confidence of not only a durable alignment of headline inflation with the target of 4 per cent, as exuded in the last meeting, but also the belief that during the year, it is likely to undershoot the target at the margin.
While food inflation outlook remains soft, core inflation is expected to remain benign with easing of international commodity prices in line with the anticipated global growth slowdown, Malhotra explained.
The sharp decline in inflation has enabled the RBI to go in for a 50 basis points cut in the repo rate from 6 per cent to 5.5 per cent to spur growth in the economy, in the monetary policy review last month.
The RBI also announced a 100 basis point cut in the Cash Reserve Ratio (CRR), from 4 per cent to 3 per cent, to be implemented in four tranches of 25 bps each. The step is expected to inject Rs 2.5 lakh crore into the banking system, boosting liquidity and supporting credit flows.
These measures are aimed at spurring growth as easing inflation has given the RBI headroom for a soft money policy that reduces interest rates, making loans for business investments and consumer spending cheaper and also more easily available.