India's retail inflation eases to over six-year low in June at 2.1%

Continuing its downward trend, retail inflation in India hit a new over six-year low in June, in further respite to common people. According to the statistics ministry, the year-on-year inflation rate based on Consumer Price Index (CPI) for June was 2.10 per cent (provisional), a decline of 72 basis points in headline inflation from May 2025. It is the lowest year-on-year inflation since January 2019. Notably, the year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) for June was (-) 1.06 per cent (Provisional). Corresponding inflation rates for rural and urban are (-) 0.92 per cent and (-) 1.22 per cent, respectively. A sharp year-on-year decline of 205 basis points is observed in food inflation in June 2025. The significant decline in headline inflation and food inflation during the month of June 2025 is mainly attributed to favourable base effect and decline in inflation of vegetables, pulses and products, meat and fish, cereals and products, sugar and confectionery, milk and products, and spices.

The inflation rate is within the Reserve Bank of India's (RBI) manageable range of 2-6 per cent.

Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable.

Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent.

Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it first time in about five years in February 2025.

Analysts expect inflation to remain under control, allowing the RBI to focus on supporting economic growth. The recent 50 basis points repo cut was quite an indication.

The inflation outlook for the year 2025-26 has been revised downwards from RBI's earlier forecast of 4 per cent to 3.7 per cent.

Separately, Wholesale inflation (WPI) in India turned negative in June at (-) 0.13 per cent as against 0.39 per cent in May. In April 2023, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported to be negative.

In 2023, Wholesale Price Index-based inflation turned negative for seven consecutive months. Notably, the wholesale price index (WPI)- based inflation had been in double digits for 18 months in a row till September 2022, before declining.

Economists often say a little rise in wholesale inflation is good, as it typically incentivises goods manufacturers to produce more.

(Except for the headline, this story has not been edited by DNA staff and is published from ANI)