New Delhi | July 17, 2025 : India’s retail inflation fell to 2.1% in June 2025, the lowest since January 2019, offering a hopeful sign for the economy. However, the drop may not immediately translate into major relief for consumers.

The sharp decline is largely driven by negative food inflation, which stood at -1.06%, with urban areas seeing -1.22% and rural regions at -0.92%. This is the first time food inflation has gone negative since February 2019. Additionally, fuel inflation eased to 2.6%, helped by falling global crude prices and reduced inflation in electricity, firewood, and other fuels.

The government attributed the dip to a favourable base effect and softening prices in vegetables, pulses, cereals, milk, meat, sugar, and spices. In June 2024, retail inflation was much higher at 5.08%, so the slowdown in the rate of increase is significant—though it doesn’t mean prices are coming down, only that they’re rising more slowly.

On the other hand, core inflation, which excludes food and fuel rose slightly from 4.2% to 4.4%, showing that price pressure continues in sectors like education, health, and housing.

While domestic inflation eased, imported inflation continued to climb, marking its 13th consecutive monthly increase. This is largely due to rising prices of precious metals like gold and silver. Imported inflation accounted for 71% of the total inflation build-up in June, up from 50% in May.

Experts believe the inflation trend may continue downward, supported by a strong agricultural outlook. The third advance estimates show record wheat production, and the India Meteorological Department has reported an above-normal monsoon so far, with 110% of the long-period average rainfall as of July 13. Healthy kharif sowing is also underway, reinforcing optimism.

Global factors are playing in India’s favor too. With Brent crude projected to stay around $60–$65 per barrel, non-food inflation is also expected to remain contained provided geopolitical tensions remain under control.

Financial analysts have noted that the inflation dip provides the Reserve Bank of India (RBI) more flexibility for monetary easing. With 100 basis points already cut so far, there could be more rate reductions ahead to support economic growth.

Overall, India’s record-low inflation numbers reflect a positive macroeconomic shift, but for the average consumer, the real relief will depend on how long this trend lasts and whether it begins to impact actual price levels in markets.