India’s Retail Inflation Hits Six-Year Low in June

India’s Retail Inflation Hits Six-Year Low in June

India’s Consumer Price Index (CPI) rose just 2.10% year‑on‑year in June 2025—its lowest level since January 2019 and well within the RBI’s 2–6% target band 

Key Drivers Behind the Slowdown

• Food price contraction: Prices of vegetables dropped ~19%, pulses ~12%, while cereals saw slower price growth (~3.7%) 

• Wholesale deflation: WPI turned negative at –0.13%, underlining easing cost pressures from farm to fork

Core Inflation Trends

Despite the drop in headline figures, core CPI (excluding food and fuel) edged up to ~4.4–4.6%, influenced by rising prices of gold and healthcare services .

Implications for RBI and the Economy

With CPI hovering at the lower threshold, the RBI has already cut repo rates by 50 bps in June and signaled potential further easing. Still, policymakers are expected to pause in August, await monsoon updates, and reassess economic signals before clipping more rates

Why This Matters

• Consumer relief: Lower food inflation eases the financial burden on households.

• Policy space: Keeps the RBI’s window open for potential rate cuts to support growth.

• Watch core CPI: Persistent rise here may signal underlying demand strength.

In Summary

India’s dramatic drop in retail inflation to 2.10% in June—driven mainly by sharp food price declines (~–1.06%)—marks a significant moment in the post-pandemic economy. With wholesale inflation also negative, the RBI has maneuvered into a supportive stance. Still, persistent core inflation means any further rate adjustments will be data-driven and cautious.