India’s retail inflation dropped to a six-year low of 2.10 percent in June, driven by a sharp fall in food prices and favourable base effects, according to government data released on Monday.
This is the second consecutive month that headline inflation has remained below 3 percent, and the fifth straight month it has stayed under the Reserve Bank of India’s medium-term target of 4 percent. The latest reading is also the eighth month in a row that inflation has remained below the RBI’s upper tolerance limit of 6 percent.
"There is a decline of 72 basis points in headline inflation of June 2025 in comparison to May 2025. It is the lowest year-on-year inflation since January 2019," the Ministry of Statistics said in a statement.
Retail inflation had stood at 2.82 percent in May and 5.08 percent in June 2024.
Food inflation — which makes up nearly half of the Consumer Price Index (CPI) basket — fell into negative territory at -1.06 percent in June, compared with 0.99 percent in May. The decline was primarily attributed to a favourable base effect and price reductions in key components such as vegetables, pulses, cereals, meat and fish, milk, sugar, and spices.
Rural and urban food inflation stood at -0.92 percent and -1.22 percent, respectively. The June figure marks the lowest food inflation since January 2019.
The inflation data comes a month after the RBI’s Monetary Policy Committee (MPC) cut the repo rate by 50 basis points to 5.5 percent, marking its third consecutive rate cut this year. The MPC also shifted its stance to "neutral", signalling a more balanced approach to managing growth and inflation risks.
For the current financial year (FY26), the RBI lowered its CPI inflation forecast to 3.70 percent, from its earlier estimate of 4 percent made in April.
The MPC noted that although inflation has eased substantially since late 2024, external risks and supply-side uncertainties still require vigilance. However, it described the inflation outlook as “evenly balanced”.
