Retail Inflation / Big relief from inflation, lowest retail inflation in 78 months

Retail Inflation: There is double good news for the common people in India regarding inflation. First there was a big decline in wholesale inflation, which has come in minus. Now retail inflation has also come down by 72 basis points, and it has come down to 2 percent. According to the government report, retail inflation reached the lowest level in the last 78 months with 2.10 percent in June 2025. This is the fifth consecutive month when inflation remained below the Reserve Bank of India's (RBI) medium-term target of 4 percent and the eighth consecutive month when it remained below the upper tolerance band of 6 percent.

Lowest inflation in 78 months

According to the report, core inflation in June 2025 declined by 72 basis points compared to May 2025, which is the lowest since January 2019. This is the second consecutive month when inflation remained below 3 percent. Retail inflation was 2.82 per cent in May 2025, while it was 5.08 per cent in June 2024. A Reuters survey of 50 economists had estimated that retail inflation would come down to 2.50 per cent in June, but the actual figure was even better than that.

Food inflation also saw a significant decline. Food inflation stood at -1.06 per cent in June, up from 0.99 per cent in May. The decline was mainly due to a favorable base effect and a reduction in prices in major categories such as vegetables, pulses, meat, fish, cereals, sugar, milk, and spices. Food inflation was recorded at -0.92 per cent in rural areas and -1.22 per cent in urban areas. This is the lowest food inflation since January 2019.

RBI policies and estimates

These figures have come when recently the RBI's Monetary Policy Committee (MPC) cut the repo rate by 50 basis points to 5.5 per cent. This was the third consecutive cut this year. Also, the policy stance was changed to "neutral" to adopt a balanced approach towards future inflation and economic growth.

For FY26, the RBI has lowered its CPI inflation forecast from 4 per cent to 3.70 per cent. According to the quarter-wise forecast, inflation is expected to be 2.9 per cent in the first quarter, 3.4 per cent in the second quarter, 3.5 per cent in the third quarter, and 4.4 per cent in the fourth quarter.

Future prospects

According to the RBI, inflation has come down significantly since crossing the tolerance band at the end of 2024. However, global uncertainties and supply side risks are being closely monitored. RBI Governor Sanjay Malhotra said, "Inflation has come down significantly in the last six months, and price pressures are expected to ease further in the coming months."

This situation has brought a sigh of relief to the common people, as low inflation means an increase in their purchasing power and a reduction in the cost of daily needs. Experts believe that this positive trend may continue due to favorable weather, better supply chain, and policy measures.