Consumer Price inflation falls to lowest since Feb-19
Ministry of Statistics stated in a latest update that year-on-year inflation rate based on All India Consumer Price Index (CPI) for the month of May, 2025 over May, 2024 is 2.82% (Provisional). There is decline of 34 basis points in headline inflation of May, 2025 in comparison to April, 2025. It is the lowest year-on-year inflation after February, 2019. Year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) for the month of May, 2025 over May, 2024 is 0.99% (Provisional). Corresponding inflation rate for rural and urban are 0.95% and 0.96%, respectively. All India inflation rates for CPI(General) and CFPI over the last 13 months are shown below. A sharp decline of 79 basis point is observed in food inflation in May, 2025 in comparison to April, 2025. The food inflation in May, 2025 is the lowest after October, 2021.
The sharp drop in headline inflation and food inflation during the month of May, 2025 is mainly attributed to decline in inflation of Pulses & products, Vegetables, Fruits, Cereals & products, Households goods & services, Sugar & confectionary and Egg and the favourable base effect.
Rural Inflation: Significant decline was noted in headline and food inflation in rural sector observed in May, 2025. The headline inflation is 2.59% (Provisional) in May, 2025 while the same was 2.92% in April, 2025. The CFPI based food inflation in rural sector is observed as 0.95% (Provisional) in May, 2025 in comparison to 1.85% in April, 2025.
Urban Inflation: Significant decline was noted from 3.36% in April, 2025 to 3.07% (Provisional) in May, 2025 is observed in headline inflation of urban sector. Sharp decline is also observed in food inflation from 1.64% in April, 2025 to 0.96% (Provisional) in May, 2025.
Housing Inflation: Year-on-year Housing inflation rate for the month of May, 2025 is 3.16% (Provisional). Corresponding inflation rate for the month of April, 2025 was 3.06%. The housing index is compiled for urban sector only.
Education Inflation: Year-on-year Education inflation rate for the month of May, 2025 is 4.12% (Provisional). Corresponding inflation rate for the month of April, 2025 was 4.13%.
Health Inflation: Year-on-year Health inflation rate for the month of May, 2025 is 4.34% (Provisional). Corresponding inflation rate for the month of April, 2025 was 4.25%.
Transport & Communication: Year-on-year Transport & communication inflation rate for the month of May, 2025 is 3.85%(Provisional). Corresponding inflation rate for the month of April, 2025 was 3.67%. It is combined inflation rate for both rural and urban sector.
Fuel & light: Year-on-year Fuel & light inflation rate for the month of May, 2025 is 2.78%(Provisional). Corresponding inflation rate for the month of April, 2025 was 2.92%.
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At one point during the session, futures prices soared as high as $3,466.74 per ounce, before settling between $3,436 and $3,444, highlighting the market's heightened volatility. What's driving the gold price surge? Safe-haven demand skyrocketed after Israel launched strikes on Iran, leading investors to move their money into traditional safety assets like gold. Weaker-than-expected U.S. inflation data (both CPI and PPI) raised the likelihood of a Federal Reserve rate cut in the near term, making non-yielding assets like gold more attractive. The escalating Middle East conflict has added a geopolitical risk premium to gold, with fears of wider regional instability driving demand higher. Market & macro outlook Despite the strong upside, analysts note that gold futures may face resistance around $3,444, while support is seen near $3,380—suggesting a potential short-term pullback if geopolitical tensions ease over the weekend. Live Events At the same time, ongoing concerns about global trade disruptions, including recent U.S. tariff announcements, are contributing to mixed pressure on commodity markets. Additional insights Spot gold hovered around $3,427.36 , while U.S. gold futures were last seen near $3,448.70 per ounce , with weekly gains estimated at 3.5% . In contrast, cryptocurrencies took a hit , with Bitcoin and other major tokens dropping between 2% and 10%, weakening the narrative of digital assets as alternative safe-haven investments. Why did Israel's strike on Iran cause gold prices to jump? The sharp rise in gold prices followed reports that Israel had launched a major military offensive on Iran, targeting 'dozens' of military and nuclear sites. This marks one of the most significant attacks on Iran since the Iran-Iraq war in the 1980s. U.S. Secretary of State Marco Rubio said Israel acted independently in self-defense, just days ahead of a planned sixth round of U.S.-Iran nuclear deal talks. The White House had earlier hinted at possible military action if negotiations failed, with a crucial deadline ending Thursday. In retaliation, Iran launched more than 100 drones toward Israel. This prompted Israeli authorities to sound sirens and declare a state of emergency, bracing for an expected wave of missile and drone counterattacks from Tehran. What does rising geopolitical risk mean for investors? Gold is traditionally considered a safe-haven asset, especially during times of geopolitical uncertainty. As the Middle East conflict escalates, investors tend to move their money into gold, seeking stability against the backdrop of war threats and regional instability. With the Israel-Iran conflict intensifying, risk-averse investors appear to be flocking toward gold as a hedge. Analysts suggest that until the situation calms, demand for gold could remain strong and push prices further toward April's historic highs. Is U.S. inflation cooling and helping gold's momentum? Another key factor supporting gold is the cooling inflation trend in the United States. Recent U.S. economic data showed a rise in jobless claims and weaker producer prices, raising hopes that the Federal Reserve may be inching closer to cutting interest rates later this year. Since gold doesn't pay interest, it typically becomes more attractive when borrowing costs are expected to drop. The Fed's potential policy shift has added further upward pressure on gold, encouraging investors to lock in positions amid changing market dynamics. What's happening in other metal markets? 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Gold holds value during war and crisis, making it a trusted safe-haven asset.
