India witnessed a sharp decline in its retail inflation rate in June 2025, with the Consumer Price Index (CPI) falling to 2.1%, according to the Ministry of Statistics and Programme Implementation. This marks the lowest inflation reading since January 2019, when the figure was recorded at 2.05%. In comparison, May 2025 saw inflation at 2.82%, reflecting a substantial month-over-month decline.
The reduction in inflation was primarily driven by easing food and fuel prices, alongside favorable base effects. Food inflation, tracked through the Consumer Food Price Index (CFPI), actually slipped into negative territory. Rural food inflation dropped to -0.92%, while urban food inflation fell further to -1.22%. Prices of vegetables, cereals, pulses, fish, meat, sugar, milk, and spices all registered declines, contributing to the overall downward trend.
In rural regions, overall inflation declined from 2.59% in May to 1.72% in June. Similarly, urban inflation slowed from 3.12% in May to 2.56% in June. Fuel and light categories also saw relief, with inflation easing to 2.55% from 2.84% the previous month.
Among Indian states, Kerala stood out with the highest year-on-year inflation rate at 6.71%. The state’s Consumer Price Index rose from 199.7 in June 2024 to 213.1 in June 2025.
In response to these developments, the Reserve Bank of India (RBI) adjusted its inflation outlook during its June 2025 bi-monthly policy review. The central bank revised its FY26 inflation projection to 3.7%, forecasting 2.9% for Q1, 3.4% for Q2, 3.9% for Q3, and 4.4% for Q4.
India’s Wholesale Price Index (WPI) inflation also reflected a cooling trend, dipping to -0.13% in June from 0.39% in May. This marks the first negative WPI reading in 2025. The decline is mainly attributed to falling prices in food commodities, fuel, power, and essential metals.
These signs of easing inflation across both retail and wholesale markets are likely to influence the Reserve Bank of India’s upcoming monetary policy decisions, potentially creating room for future rate adjustments.
