Retail inflation fell to an eight-year low in July as food prices moderated. Furthermore, the easing trend continued for the ninth month in a row, providing price stability in the face of trade tensions.
The National Statistics Office (NSO) reported that retail inflation, as measured by the consumer price index (CPI), slowed to 1.6%, down from 2.1% in June and lower than 3.6% in July last year. For the first time in eight years, the rate fell below 2%.
Key Highlights
- India’s retail inflation in July dropped to an eight-year low of 1.55%, led by falling food prices.
- Monthly inflation eased further for the ninth consecutive month, reflecting continued disinflation across key consumer items.
Food inflation fell by 1.8% in July, following a 1% decline in June. The sharp drop in overall retail inflation and food inflation in July is largely due to a favorable base effect and a decrease in the inflation of pulses and products, transportation and communication, vegetables, cereal and products, education, eggs, and sugar and confectionery.
The data showed that rural inflation was 1.2% lower than urban inflation, which was 2.1%.
"Food inflation fell by 75 basis points in July compared with June. Food inflation in July 2025 is the lowest, at -1.8%, since January 2019, when it was -2.2%. Core inflation also fell sharply, dropping below 4% for the first time in six months (at 3.9%). Excluding gold prices, core inflation fell below 3% to 2.96% in July, nearly 100 basis points lower than headline core CPI," said Soumya Kanti Ghosh, group chief economic adviser at SBI.
Also Read: RBI Governor Malhotra Hints at Further Rate Cuts Amid Cooling Inflation
Vegetable inflation fell by 20.7% in July, while pulses and products fell by 13.8%. Food and beverage inflation fell by 0.8% this month. According to experts, the RBI will wait and see how the impact of US tariffs on growth affects interest rates.
