India’s retail inflation eased to 2.82%in May 2025 --- the lowest level recorded since February 2019, as per government data released on Thursday. This shows a notable declined from April’s 3.16%, signalling continued relief on the price front.
The year-on-year food inflation, measured by the All India Consumer Food Price Index (CFPI), stood at a provisional 0.99% in May 2025 compared to the same month last year. Rural and urban food inflation came in at 0.95% and 0.96%, respectively.
A significant drop of 79 basis points was recorded in food inflation from April to May 2025, bringing it to its lowest level since October 2021.
The sharp drop in inflation is largely attributed to falling prices of key items such as pulses and related products, vegetables, fruits, cereals, household goods and services, sugar and confectionery, and eggs — combined with a favourable base effect.
Further Dip Expected
“We expect the CPI-food and beverages inflation to ease further in June 2025, supported by a favourable base. This is expected to pull down the headline CPI in inflation print to 2.5% in the month,” said Aditi Nayar, chief economist and Head of Research & Outreach at ICRA.
For this, the economist believes that the temporal and spatial distribution is crucial to ensure favourable increase in crop yields; excessive rainfall concentrated during short periods could destroy the standing crops.
“We expect food inflation to cool further, attributed to the anticipated good monsoon. Moreover, crude prices are expected to stabilise within the range of $60 to $65 per barrel in the short to medium term, a development that will substantially boost private final consumption expenditure and, consequently, stimulate higher economic growth,” said Hemant Jain, President of PHDCCI.
Overall, Nayar expects the CPI inflation to cool down to 3.5% in FY26 as compared to 4.6% in FY25. This is lower than MPC’s revised forecast of 3.7%.
Likewise, we expect the GDP growth to print at 6.2% in FY26, lower than the MPC’s forecast of 6.5% for the fiscal year. For August 2025, we expect rates to be unchanged, she added.
