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Informist, Monday, Jul. 14, 2025
NEW DELHI – India's headline CPI inflation fell to a 77-month low of 2.10% in June largely because of a high base effect, data released by the statistics ministry Monday showed. The last time inflation was lower than June print was in January 2019, when it was 1.97%.
At 2.10%, retail inflation in June was lower than the consensus estimate. According to an Informist poll, headline inflation was seen at 2.3% in June. CPI inflation was 2.82% in May and 5.08% in June 2024.
This is the eighth consecutive month that inflation has declined from the previous month. This is also the fifth month in a row when CPI inflation has stayed below the Reserve Bank of India's medium-term target of 4.0%. Retail inflation averaged 2.7% in Apr-Jun, 20 basis points lower than the RBI's forecast of 2.9% for the quarter. This could provide the RBI's Monetary Policy Committee more space to support growth, having already reduced the repo rate by 100 basis points in 2025 so far to 5.50%.
Food inflation fell into the negative zone in June, meaning retail food prices fell compared with June 2024. Food inflation fell into the negative zone for the first time since February 2019, and the (-)1.06% print was the lowest since January 2019. Core inflation--which excludes food and fuel items--rose to a 21-month high of 4.4% in June. Core inflation was 4.3% in May.
While headline inflation moderated in June, the general index of the CPI rose 0.6% from May. The sequential rise in the general index is highest in eight months. Typically, the overall index rises sequentially during the summer months mainly because of a rise in vegetable prices.
The food price index rose 1.1% on month in June, the biggest rise since October. The rise in food prices was led by a 7.2% month-on-month increase in vegetable prices. Prices of oils and fats rose 0.7%, contributing to the sequential rise in food prices in June. Retail pulses prices fell 1.4% on month in June and cereal prices were down 0.3% from May.
Rural inflation fell to 1.72% last month from 2.59% in May. Urban inflation also moderated to 2.59% in June from 3.12% a month ago.
"The larger-than-expected fall in India's consumer price inflation to 2.1% y/y in June raises the prospect of the RBI cutting interest rates further at its policy meeting next month," said Joe Maher, assistant economist at Capital Economics. "But given the RBI delivered a bumper 50 bps rate cut last month and clearly signalled that its easing cycle was over, we suspect that the high bar for further easing has not been cleared," Maher said in a note.
Upasna Bhardwaj, Kotak Mahindra Bank's chief economist, said CPI inflation can undershoot RBI's full year estimate of 3.7% by around 50 bps. "While comfortable inflation opens room for further monetary easing, we expect the RBI to maintain a pause in the coming 1-2 meetings and remain watchful of the transmission ahead along with global uncertainties," Bhardwaj said.
The following table details sequential and annual changes in the main components of the CPI (Combined):
| Weight | Index for June | Month-on-month change (in %) | Year-on-year change (in %) | ||
| June | May | ||||
| Cereals and products | 9.67 | 197.2 | (-)0.3% | 3.73% | 4.77% |
| Meat and fish | 3.61 | 230.8 | 0.8% | (-)1.62% | (-)0.43% |
| Egg | 0.43 | 195.2 | 4.0% | 2.57% | 0.64% |
| Milk and products | 6.61 | 190.6 | 0.3% | 2.80% | 3.15% |
| Oils and fats | 3.56 | 188.4 | 0.7% | 17.75% | 17.91% |
| Vegetables | 6.04 | 189.7 | 7.2% | (-)19.00% | (-)13.70% |
| Pulses and products | 2.38 | 186.1 | (-)1.4% | (-)11.76% | (-)8.22% |
| Sugar and confectionery | 1.36 | 135.3 | 0.1% | 3.52% | 4.16% |
| Spices | 2.5 | 220.8 | (-)0.1% | (-)3.03% | (-)2.77% |
| Food and beverages | 45.86 | 198.0 | 1.0% | (-)0.20% | 1.50% |
| Pan, tobacco and intoxicants | 2.38 | 212.7 | 0.3% | 2.41% | 2.41% |
| Clothing and footwear | 6.53 | 196.8 | 0.2% | 2.55% | 2.67% |
| Housing | 10.07 | 184.9 | (-)0.5% | 3.24% | 3.16% |
| Fuel and light | 6.84 | 180.8 | (-)0.2% | 2.55% | 2.84% |
| Miscellaneous | 28.32 | 192.2 | 0.6% | 5.49% | 5.17% |
| General Index | 100 | 194.2 | 0.6% | 2.10% | 2.82% |
| Consumer Food Price Index | 39.06 | 196.6 | 1.1% | (-)1.06% | 0.99% |
Source: Ministry of Statistics and Programme Implementation
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Reported by Shubham Rana
Edited by Akul Nishant Akhoury
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