Retail inflation slides to 1.55% in July 2025, lowest since 2017

Retail inflation, based on the Consumer Price Index (CPI), eased to 1.55% in July, according to figures released Tuesday by the Ministry of Statistics and Programme Implementation (MoSPI). This follows June’s CPI headline inflation of 2.1% — the lowest in 77 months and the eighth straight month of decline — largely driven by a steep drop in food inflation, aided by stronger agricultural output and targeted supply-side interventions. In its 6 August monetary policy review, the Reserve Bank of India (RBI) revised its full-year inflation forecast downward from 3.7% to 3.1%. The RBI’s Monetary Policy Committee highlighted that the sharper-than-expected fall in headline inflation was primarily the result of swings in food prices, particularly vegetables.

Food inflation, tracked by the Consumer Food Price Index (CFPI), slipped deeper into deflation at -1.76% in July from -1.01% a month earlier — the lowest since January 2019. Rural and urban food inflation stood at -1.74% and -1.90%, respectively. The decline of 75 basis points from June was largely driven by lower prices for pulses, vegetables, cereals, eggs, sugar, and certain services like transport, communication, and education, alongside a favourable base effect.

Rural Inflation: In rural areas, headline inflation fell to 1.18% in July from 1.72% in June, while rural food inflation dropped from -0.87% to -1.74%.

Urban Inflation: Urban headline inflation eased to 2.05% in July from 2.56% in June, with food inflation sliding further into negative territory from -1.17% to -1.90%.

Category-wise trends:

Housing inflation in urban areas was steady at 3.17% in July versus 3.18% in June.

Education inflation (combined rural and urban) softened to 4.00% from 4.37%.

Health inflation inched up to 4.57% in July from 4.38% in June.

The sharp cooling in both headline and food inflation underscores a combination of base effects and broad-based easing across key food categories and certain service costs.