Retail Inflation Hits 6-Year Low of 2.82% in May 2025

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