Retail Inflation Hits Eight-Year Low In July, Official Data Shows

Retail inflation in India eased to an eight-year low of 1.55 per cent in July 2025, driven largely by a sharp drop in food prices, government data revealed on Tuesday. 

The latest reading, based on the Consumer Price Index (CPI), marked a decline from 2.1 per cent in June 2025 and was well below the 3.6 per cent recorded in July 2024.

Retail inflation in July slips to 1.55 pc, lowest since June 2017: Govt data. pic.twitter.com/rbK4gvvClS

— Press Trust of India (@PTI_News) August 12, 2025

According to the National Statistics Office (NSO), this is the lowest level of retail inflation since June 2017, when it had stood at 1.46 per cent. Officials attributed the notable fall in both overall inflation and food inflation to a favourable base effect and reduced price pressures in several key categories.

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Decline Led by Lower Food Prices

The NSO report highlighted that the biggest contributors to the slowdown were declines in inflation for pulses and related products, transport and communication, vegetables, cereals, education, eggs, sugar, and confectionery. Food inflation for the month recorded a year-on-year rate of (-) 1.76 per cent, indicating a fall in overall food prices compared to the same period last year.

Vegetables and cereals, two major components of the food basket, saw significant price moderation, easing pressure on household budgets. Similarly, lower costs for eggs, sugar and related items, coupled with cheaper transportation and communication services, played a key role in bringing down the headline figure.

The Reserve Bank of India (RBI) has forecast CPI inflation at 3.1 per cent for 2025–26, supported by steady monsoon progress and strong kharif sowing, which are expected to help keep food prices under control.

RBI Sees Moderation, But Caution Ahead

RBI Governor Sanjay Malhotra recently noted, “The inflation outlook for 2025-26 has become more benign than expected in June. Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation.”

However, the central bank expects CPI inflation to move above 4 per cent by the fourth quarter of 2025–26 and beyond, as base effects wane and demand-side pressures from policy measures begin to emerge. Core inflation, barring any major shocks to input prices, is projected to stay moderately above 4 per cent during the year.