Outlook Business Desk
India’s retail inflation dropped to a more than six-year low of 2.82% in May 2025, according to government data. This marks a 34 basis point decline from April and is the lowest year-on-year inflation rate since February 2019.
A Reuters poll had predicted May’s retail inflation to ease to 3%. The sharper-than-expected drop to 2.82% was driven by falling food inflation, favourable base effects, and slower price rises in essential goods.
Food inflation fell sharply to 0.99% in May 2025 from 1.78% in April — a 79 basis point decline. Rural food inflation was at 0.95%, while urban areas recorded 0.96%, reflecting broad-based relief in food prices.
Rural inflation fell from 2.92% to 2.59%, while urban eased from 3.36% to 3.07%, showing sharper cooling in rural areas.
Housing inflation rose slightly to 3.16% year-on-year in May 2025, up from 3.06% in April. The housing index, compiled exclusively for the urban sector, reflects stable yet gradual price increases in residential costs.
India’s year-on-year education inflation stood at 4.12% in May 2025, marginally down from 4.13% in April. This combined rate reflects inflation trends across both rural and urban education sectors.
Health (4.34%), transport & communication (3.85%), fuel & light (2.78%) all stayed in mild‑to‑moderate range, showing steadier cost trends.
In May 2025, 12 out of 22 major states recorded retail inflation below the national average of 2.8%. These include Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Jharkhand, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.
The RBI maintained its FY26 GDP growth forecast at 6.5% in the June review, offering stability amid global uncertainties. With inflation expected to average 4% this year, the focus may gradually shift from inflation control to boosting credit and growth.