Pocket-Friendly May: India’s CPI Inflation at Record Low, Food Costs Tumble

India’s retail inflation cooled to a remarkable six-year low in May 2025, with the Consumer Price Index (CPI) rising just 2.82% year-on-year, according to government data released Thursday. Food inflation, a major driver of household expenses, slowed sharply to 0.99%—signaling a period of price stability that’s likely to boost consumer sentiment and shape monetary policy in the coming months.

 

Key Highlights:

 

Headline CPI at Historic Lows: May’s CPI inflation rate of 2.82% marks the first time since April 2019 that inflation has fallen below the 3% mark, continuing a steady downward trajectory from April’s 3.16%. This is the seventh consecutive month of moderation, reflecting broader disinflationary trends in the economy.

 

Food Inflation Eases: Food price inflation slowed to just 0.99% year-on-year. While certain vegetables like potatoes and tomatoes saw sequential price increases, the overall cost of essentials such as cereals and pulses declined, easing the burden on Indian households.

 

Core Inflation Watch: Despite the cooling headline numbers, core inflation—which excludes volatile food and fuel items—edged up slightly to around 4.2%. This suggests some underlying demand pressures remain, particularly in non-food sectors.

 

Policy Impact: The Reserve Bank of India’s recent 50 basis point rate cut was underpinned by this benign inflation outlook. With inflation now well within the RBI’s 2-6% comfort zone, the central bank is expected to maintain a neutral policy stance while monitoring the evolving impact of the monsoon on food prices.

 

Market and Economic Outlook: Experts attribute the inflation moderation to a favorable base effect, robust winter crop harvest, and lower agricultural input costs. However, the pace of price corrections in food items may slow, with the monsoon’s progress remaining a key variable for future inflation prints.

 

With inflation at multi-year lows and food prices stabilizing, India’s economic environment appears set for a period of renewed growth and consumer optimism.

 

Sources: Indian Express, Business Standard, Republic World