India’s Retail Inflation Drops to 1.55% in July 2025, Lowest Since 2017 as Food Prices Decline
New Delhi, Aug 12 (TheTrendingPeople) – India’s retail inflation, measured by the Consumer Price Index (CPI), eased to 1.55% in July 2025, marking the lowest year-on-year rate since June 2017, according to data released by the Ministry of Statistics on Tuesday.
The moderation was driven primarily by a steep fall in food prices, which pushed food inflation into negative territory. The headline inflation rate is now significantly below the Reserve Bank of India’s (RBI) comfort range midpoint of 4%.
A Steady Decline Since June
July’s CPI inflation rate was 55 basis points lower than June’s reading of 2.1%, which itself was the lowest since January 2019. The latest decline is being attributed to a favourable base effect and broad-based price drops across key food categories.
Food inflation fell to -1.76% in July from -1.01% in June—the sharpest decline since January 2019. Prices of pulses, vegetables, cereals, eggs, and sugar all saw significant moderation.
Non-Food Components Also Eased
Apart from food, the cost of transport and communication, education, and housing also showed mild declines during the month, contributing to the easing in headline inflation.
Economists note that the softening in services inflation, combined with steady supply conditions, is helping to keep price pressures contained.
RBI’s Inflation Outlook Remains Cautiously Optimistic
The Reserve Bank of India has projected CPI inflation to average 3.1% in 2025-26, citing favourable weather conditions and strong agricultural output as stabilising factors.
RBI Governor Sanjay Malhotra said the inflation outlook has become “more benign than expected in June”, crediting the following:
- Large favourable base effects
- Steady progress of the southwest monsoon
- Healthy kharif sowing
- Adequate reservoir levels
- Comfortable buffer stocks of foodgrains
“The inflation outlook for 2025-26 has become more benign than expected in June. Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation,” Malhotra said.
Caution Ahead: Inflation May Rise in Late FY26
While the near-term outlook appears favourable, the RBI cautions that CPI inflation could edge above 4% by Q4 of 2025-26 due to:
- Unfavourable base effects later in the year
- Demand-side pressures from policy actions
- Seasonal spikes in food prices
Core inflation—excluding food and fuel—is expected to remain moderately above 4% unless there is a major decline in input costs.
Why This Matters for Households and Policy
- Lower food and services prices ease cost-of-living pressures for households.
- A sustained period of low inflation could give the RBI more policy flexibility to support economic growth.
- The agriculture sector’s strong performance underscores the importance of monsoon patterns in India’s price stability.
Final Thoughts from TheTrendingPeople.com
India’s July inflation numbers offer a rare combination of low price pressures and stable food supplies. However, with potential risks on the horizon, policymakers will need to strike a balance between supporting growth and keeping inflation expectations anchored.