India's retail inflation hits new 6-year low, driven by falling food prices
The inflation rate is within the Reserve Bank of India's (RBI) manageable range of 2-6 per cent.
Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable.
Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent.
Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it first time in about five years in February 2025.
Analysts expect inflation to remain under control, allowing the RBI to focus on supporting economic growth. The recent 50 basis points repo cut was quite an indication.
The inflation outlook for the year 2025-26 has been revised downwards from RBI's earlier forecast of 4 per cent to 3.7 per cent.
Separately, Wholesale inflation (WPI) in India turned negative in June at (-) 0.13 per cent as against 0.39 per cent in May. In April 2023, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported to be negative.
In 2023, Wholesale Price Index-based inflation turned negative for seven consecutive months. Notably, the wholesale price index (WPI)- based inflation had been in double digits for 18 months in a row till September 2022, before declining.
Economists often say a little rise in wholesale inflation is good, as it typically incentivises goods manufacturers to produce more. (ANI)
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