Retail Inflation Trends in India
India's retail inflation experienced a further decline in May 2025, reaching 2.82% from 3.16% in April. This decrease was influenced by several factors, including a favorable base effect and significant reductions in prices of vegetables and pulses.
Key Influences on Inflation
- The Consumer Price Index (CPI) had last reported a lower level in February 2019, at 2.57%.
- Food inflation fell to a 43-month low of 0.99% in May, down from 1.78% in April.
- Significant price drops were noted in:
- Vegetables: 13.7% year-on-year decline
- Pulses: 8.23% decline
- Edible oil prices surged by 17.9%, marking a persistent concern.
- Fruit prices continued to rise by 12.7%, marking five consecutive months of double-digit inflation.
Additional Economic Insights
- Core inflation, excluding volatile food and fuel components, increased to 4.2% in May.
- Fuel prices rose to a level not seen since August 2023, despite a deceleration to 2.78%.
- Service inflation trends:
- Increased in personal care (13.5%), health (4.34%), and transport (3.85%).
- Decreased in recreation (2.45%) and household services (2%).
Regional Inflation Variations
- Rural inflation: 2.59%, Urban inflation: 3.07%.
- Kerala recorded the highest retail inflation at 6.46%, while Telangana had the lowest at 0.55%.
Monetary Policy and Economic Outlook
- On June 6, the Reserve Bank of India (RBI) reduced the repo rate by 50 basis points and adopted a "Neutral" stance.
- RBI revised the retail inflation projection for the current year to 3.7%.
- Economists expect rates to remain unchanged in the upcoming policy review.
Inflation Statistics (2019-2025)
The summary of inflation rates from January 2019 to May 2025, sourced from the Ministry of Statistics and Programme Implementation (MoSPI), shows fluctuations in inflation, with significant peaks and troughs during this period.
