India's Retail Inflation Drops to 6-Year Low – June 2025 Update

India’s retail inflation (CPI) fell sharply to 2.1% in June, the lowest in 77 months, down from 2.8% in May. This steep fall is mainly due to easing food prices, which also pushed wholesale inflation down to -0.13%, near a two-year low. Key Food Price Movements: • Vegetables: 🔻 19% YoY • Pulses: 🔻 12% YoY • Oils: 🔼 17.8% inflation • Fruits: 🔼 12.6% inflation • Meat & Fish: Deflation for 3rd straight month • Eggs: 🔼 2.6% (6-month high) This trend marks the first time since April 2019 that food inflation has entered deflationary territory. Other Categories: • Clothing & Footwear: Eased to 2.55% from 2.67% • Healthcare, transport, and gold prices saw a mild rise Impact on RBI & Interest Rates: • The repo rate has already been cut three times since Feb, including a 50 bps cut in June, now at 5.5% • Q1 FY26 inflation averaged 2.7%, below the RBI’s 2.9% forecast However, while inflation is low, economists say the RBI may not cut rates immediately and will likely wait for more clarity on how lower rates are affecting the economy and how global risks evolve. In Simple Words: Prices of many food items have dropped, which helped bring overall inflation to the lowest level in over 6 years. This gives the RBI some room to cut rates, but they are likely to stay cautious and wait before making the next move.