India’s Retail Inflation Falls To Over 6-year Low Of 2.1 Per Cent In June

India’s retail inflation based on the Consumer Price Index (CPI) fell to 2.1 per cent in June, marking the lowest level since January 2019.

The Ministry of Statistics released the data on Monday, highlighting a significant drop from the 2.82 per cent recorded in May.

This decline represents a 72 basis point fall over the previous month and a sharp year-on-year moderation. It reflects continued easing in consumer prices, particularly in the food sector.

Food inflation turns negative for the first time

Food prices played a major role in cooling inflation. The annual food inflation rate dropped to -1.06 per cent in June, the lowest since January 2019. This marks a 205 basis point drop from the previous month.

Vegetables saw the steepest fall, with prices tumbling 19 per cent. Prices of pulses declined by 11.76 per cent, while meat and fish fell by 1.62 per cent. Spices also turned cheaper by 3.03 per cent. The decline pushed overall food inflation into negative territory for the first time.

RBI cuts rates as inflation outlook softens

With inflation easing, the Reserve Bank of India (RBI) revised its inflation forecast for 2025–26 down to 3.7 per cent from the earlier 4 per cent estimate.

RBI Governor Sanjay Malhotra said the CPI trajectory showed broad-based moderation, now well below the central bank’s 4 per cent target.

RBI now projects CPI inflation for the financial year as follows: Q1 at 2.9 per cent, Q2 at 3.4 per cent, Q3 at 3.9 per cent, and Q4 at 4.4 per cent.

In response, the RBI cut the repo rate by 50 basis points, bringing it down from 6 per cent to 5.5 per cent to stimulate economic growth. It also reduced the Cash Reserve Ratio (CRR) by 100 basis points, from 4 per cent to 3 per cent, in four tranches of 25 bps each.

The move is expected to inject ₹2.5 lakh crore into the banking system, increase liquidity, and support credit flow.

The soft inflation outlook has given the RBI space for a loose monetary policy, making loans more affordable and accessible.

Also Read: India’s WPI Inflation Turns Negative Amid Decline In Food & Fuel Prices