India's Retail Inflation Eases to 77-Month Low in June 2025

India’s retail inflation dropped to 2.1 percent in June 2025, a 77-month low, primarily driven by falling food prices, according to government data. This marks a significant decrease from the 2.8 percent inflation recorded in the previous month.

The decline in retail inflation mirrors the trend in wholesale prices, which fell to -0.13 percent in June, as reported by the National Statistical Office (NSO).

Key Inflation Figures for June 2025:

  • Retail Inflation: 2.1%
  • Retail Food Inflation: Entered deflation for the first time since April 2019, marking a 74-month low.
  • Wholesale Inflation: -0.13%
  • April-June Quarter Inflation Average: 2.7%, which is below the RBI's estimate of 2.9% for Q1 FY26.

Breakdown of Inflation Components

Food Prices The significant drop in headline inflation was largely due to moderating food prices.

  • Vegetables: Prices were 19 percent cheaper compared to the same period last year.
  • Pulses: Prices saw a year-on-year decline of 12 percent.
  • Oils and Fruits: Prices remained elevated, with inflation rates of 17.8 percent and 12.6 percent, respectively.
  • Eggs: Prices rose by 2.6 percent, reaching a six-month high.

Core Inflation While food prices eased, core inflation showed an uptick.

  • Clothing and Footwear: Inflation eased slightly to 2.55 percent from 2.67 percent in May.
  • Other Sectors: Price pressures continued in healthcare services, transportation services, and gold.

Monetary Policy Outlook

The low inflation environment has provided the Reserve Bank of India (RBI) with room for monetary easing. The Monetary Policy Committee (MPC) has already delivered three rate cuts since February 2024, including a 50 basis point reduction in June, bringing the current repo rate to 5.5 percent.

However, economists suggest the RBI may not act immediately. Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, noted that while comfortable inflation opens room for further easing, she expects the "RBI to maintain a pause in the coming 1-2 meetings and remain watchful of the transmission ahead along with global uncertainties".

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john 2

john 2

Published on 2025/07/15
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