India’s retail inflation cooled to a six-year low of 2.82% in May 2025, primarily driven by a sharp decline in food prices. According to data released by the National Statistical Office (NSO), food inflation dropped to 0.99% from 8.69% a year ago. This development marks the lowest retail inflation level since February 2019 and is seen as a positive signal for the Monetary Policy Committee (MPC) and broader economic stability.
Why in News?
Retail inflation data released on June 12, 2025, revealed a significant decline in CPI-based inflation for May 2025, reaching a 75-month low. The steep drop in food inflation — which forms a major portion of the CPI basket — played a crucial role in this decline, prompting analysts to revisit future monetary policy expectations and economic outlooks.
Key Highlights
- CPI Inflation in May 2025: 2.82% (vs. 3.16% in April 2025, 4.8% in May 2024)
- Food Inflation: 0.99% (lowest since October 2021)
States
- Highest CPI: Kerala (6.46%)
- Lowest CPI: Telangana (0.55%)
- West Bengal: 2.45% (down from 3.16%)
Major Contributing Factors
Deflation in
- Vegetables (esp. potato, tomato, onion)
- Pulses (like arhar)
- Spices (jeera)
- Meat and poultry (chicken)
- Base effect from higher inflation last year
Government measures such as
- Customs duty cut on crude edible oils (from 20% to 10%)
External pressures remain
- Global oil prices
- Import dependency in edible oils
- Uncertainty in monsoon progress
Expert Views
- CareEdge: Edible oil inflation still a concern; overall decline welcomed.
- Icra: Food & beverages inflation at 73-month low (1.5% in May).
- Crisil: Predicts average headline inflation at 4% in FY26.
RBI Outlook
- Recent inflation trend justifies frontloaded rate cuts
- Room for further monetary easing is limited unless growth slows significantly
Significance
- Helps stabilize household budgets
- Encourages consumer spending
- Reinforces confidence in government and RBI policy decisions
- Aids in GDP growth management while keeping inflation under control
| Summary/Static | Details |
| Why in the news? | Retail Inflation Hits 6-Year Low of 2.82% in May 2025 |
| Retail Inflation (CPI) | 2.82% in May 2025 (75-month low) |
| Food Inflation | 0.99% (lowest since Oct 2021) |
| Contributing Items | Vegetables, pulses, spices, meat |
| Government Intervention | Import duty on crude edible oils reduced to 10% |
| Key States | (High-Low CPI) Kerala (6.46%), Telangana (0.55%) |
| Analyst | Forecast Inflation to average around 4% in FY26 |
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