India’s retail inflation fell for the seventh month in a row to reach 3.16% in April 2025, the lowest level since July 2019, according to the National Statistical Office (NSO). This drop, primarily driven by falling food prices, has raised expectations of a possible rate cut by the Reserve Bank of India (RBI) in its June Monetary Policy Committee (MPC) meeting.
Food Inflation Sees Sharp Drop
A significant reason behind the easing inflation is the steep fall in food prices. Food inflation dropped from 10.9% in October 2024 to just 1.8% in April 2025. Vegetable prices saw an annual decline of 11% in April, while pulses and spices also became cheaper. However, prices of edible oil and fruits continued to rise at double-digit rates.
Core Inflation Steady, Fuel Prices Rise Slightly
Core inflation, which excludes food and fuel items, remained stable at 4.1% in April. Despite a decline in global crude prices, domestic fuel inflation rose to 2.9%, up from 1.4% in March. This was partly due to an excise duty hike of ₹2 per litre on petrol and diesel from April 7.
RBI Outlook and Economic Growth Hopes
Economists believe the easing inflation paves the way for a 25 basis point rate cut by the RBI in June. The central bank has projected average inflation of 4% for 2025-26, aligning with its long-term target. Analysts expect low energy prices and a good monsoon to further stabilize prices and support economic growth.
Monsoon and Crop Outlook Positive
Good wheat procurement and forecasts of early monsoon rains in Kerala from May 27 are expected to benefit summer crops like paddy, maize, and soybean. These factors could help sustain low food inflation in the coming months.
