India recorded a dramatic drop in retail inflation for June 2025, with the Consumer Price Index (CPI) falling to 2.1%—the lowest reading in more than six years. This marks a significant shift in India’s inflation trajectory, offering relief to consumers and policymakers alike as food prices saw steep declines.
Conversely, certain categories like edible oils (up 17.8%) and fruits (up 12.6%) continued to see price increases. Egg prices also rose by 2.6%, but these exceptions could not offset the broad-based easing in the food basket.
The milestone low in inflation has several key implications:
Room for Policy Easing: The headline figure is well below market expectations and past economist forecasts, sparking speculation about further rate cuts or prolonged monetary accommodation by the RBI.
The RBI already delivered a 50-basis-point repo rate reduction in June 2025, its third consecutive cut this year.
Outlook for FY26: The central bank revised its inflation forecast for FY26 down to 3.7%, with many private economists predicting the average may undershoot this projection given the strength of food supply and supportive weather patterns.
Wholesale Price Index (WPI): Notably, wholesale inflation also dipped into negative territory, reflecting a broad-based cooling across major economic segments.
India’s sharp inflation downturn highlights the importance of strong food supply, effective policy, and favorable base effects. As the country navigates the new economic landscape, consumers and businesses alike will look for sustained price stability and further policy cues from the RBI in the months ahead.
