The inflation numbers for June 2025 were announced yesterday, 14 July, and the Consumer Price Index (CPI) inflation dropped again to a 6-year low of 2.1%. This has come as a big sigh of relief for the economy. The inflation has dropped from 2.82% recorded in May 2025 as well.
Key CPI Inflation Insights
- Firstly, the food inflation according to the All India Consumer Food Price Index (CFPI) has dipped by 1.6% in June (Provisional) compared to June 2024 data. Food inflation has been one of the key drivers of the retail inflation in India and kept the RBI on its toes for many months in the past 6 years. It was due to high food inflation that the Indian retail inflation was not coming down. Finally, food inflation has started coming down in the past few months. Even compared to May 2025 data, the food inflation has dropped 205 basis points, the lowest since January 2019.
- The food inflation declined across categories this time, whether it is vegetables, cereals, meat and fish, pulses, milk, spices, or other categories.
- The food inflation also decreased both across rural and urban areas. While the headline Inflation rate in India recorded in the rural areas is -0.92%, that in the urban areas is -1.22%. In the rural areas, both headline and food inflation declined significantly in June.
- The headline inflation was at 1.72% (provisional) in rural areas, down from 2.59% in May 2025. On the other hand, the headline inflation in urban areas declined from 3.12% in May 2025 to 2.56% in June (provisional).
- The fuel and light inflation dipped to 2.55% (provisional) in June 2025 compared to 2.84% in May 2025.
- While the food inflation, fuel costs declined to keep the overall inflation under check, here is housing inflation in the urban areas, which increased to 3.24% (provisional) in June, increasing from May’s 3.16%.
- Similarly, the transport and communication inflation for both rural and urban areas also marginally increased to 3.90% (provisional) in June from May’s 3.85%.
- Education inflation combined for rural and urban areas went up to 4.37% (provisional) compared to 4.12% in May.
- The rural and urban health inflation also rose in June 2025 to 4.43% (provisional) from 4.34% in May 2025.
Economic Outlook
With this declining inflation, the RBI will have more room for rate cuts in the future, as per experts. RBI’s Governor also commented that wheat production has topped the charts, and this great harvest can help in keeping food prices low.
Also, the favorable monsoon has been playing its part, and experts expect the average inflation to be around 2.5% in the coming six months. With the reduction in inflation, consumption has also been going up. In March 2025 quarter, the economy grew at 7.4% rate which beyond expectations and the experts anticipate this to continue however, they are also skeptical about the tariff war going on with the US.
Source: TimesofIndia
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