Consumer Inflation Drops for 7th Consecutive Month, Hits 3.2% – Lowest Since July 2019

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India’s retail inflation continued its downward trajectory for the seventh consecutive month, dipping to 3.16% in April 2025, the lowest recorded since July 2019, according to data released by the National Statistical Office (NSO) on Tuesday. This steady decline has strengthened expectations of a possible interest rate cut by the Reserve Bank of India (RBI) in its June policy review to bolster economic growth.

The April Consumer Price Index (CPI) figure marked a slight drop from 3.34% in March, aligning with projections from a Bloomberg survey of economists. A significant factor behind the easing inflation is the sharp decline in food inflation, especially the prices of vegetables.

Food inflation, which stood at 10.9% in October 2024, has steadily fallen to 1.8% in April 2025, contributing to the moderation of headline inflation from 6.21% to 3.16% over the same period. Vegetables witnessed an annual deflation of 11%, while categories like pulses and spices also saw a decline. However, edible oils and fruits recorded double-digit inflation.

Economists from HSBC India noted that a strong winter crop and robust wheat procurement—over 29 million tonnes so far—have played a role in keeping food prices in check. Additionally, the Indian Meteorological Department has forecast an early onset of the southwest monsoon by May 27, a positive sign for summer crops like paddy, maize, soybean, and oilseeds.

In other CPI categories, inflation in the fuel and light segment rose from 1.4% in March to 2.9% in April, driven partly by a ₹2 per litre excise duty hike on petrol and diesel imposed from April 7. This came despite falling international crude oil prices, which dropped from $72.5 per barrel in March to $67.7 in April, and further to $63.8 per barrel by May 9, according to petroleum ministry data.

The miscellaneous category, which primarily tracks services, showed the highest inflation among sub-indices at 5%. Meanwhile, core inflation, which excludes volatile food and fuel prices, remained stable at 4.1% in April. Analysts attributed the marginal rise in core inflation over recent months to rising gold and silver prices amid financial market volatility.

According to RBI Governor Sanjay Malhotra, the underlying inflationary pressures appear to be “benign and well anchored.” The RBI’s Monetary Policy Committee (MPC) has projected average 4% inflation for FY26, with quarterly estimates of 3.6%, 3.9%, 3.8%, and 4.4% respectively.

Crisil Chief Economist Dharmakirti Joshi expects Brent crude to remain subdued at an average of $65 per barrel in the current fiscal, helping to contain non-food inflation. He also anticipates a 25-basis point rate cut in the June MPC meeting, citing the favorable inflation trajectory.

The steady disinflation and softening food prices provide a potential window for the RBI to shift focus from price stability to growth support in its upcoming monetary policy meeting.

Sources By Agencies