Storm Beneath the Calm?

At first glance, India's inflation data for June 2025 appears to be a triumph of economic management.

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The headline retail inflation rate, measured by the Consumer Price Index (CPI), has fallen to 2.1 per cent, the lowest in over six years. Accompanied by a deflationary Wholesale Price Index (WPI) reading of -0.13 per cent, it suggests a cooling economy, stable prices, and a potential window for further monetary easing by the Reserve Bank of India (RBI).

But while the data offers comfort to policymakers, it doesn't reflect the complex reality that many households continue to face. The primary reason for this disinflationary trend is a dramatic fall in food prices. On a year-on-year basis, vegetable prices fell by 19 per cent, pulses by nearly 12 per cent, and cereals inflation touched a 41-month low. The Consumer Food Price Index (CFPI) turned negative for both rural and urban India. Rural food inflation stood at -0.92 per cent, while in urban areas, it dropped to -1.22 per cent. Add to that the favourable base effect from last year's high inflation and a good monsoon so far, and one can understand the broad-based cooling in food prices.