India’s headline retail inflation fell dramatically to 1.55% in July 2025, marking its lowest level since June 2017, according to data released by the National Statistics Office (NSO).
The decline of 55 basis points from June’s 2.10% was primarily driven by a steep fall in food prices, with the Consumer Food Price Index (CFPI) registering a deflation of 1.76% year-on-year.
Rural food inflation stood at -1.74%, while urban food inflation dipped further to -1.90%, reflecting the lowest food inflation reading since January 2019. The NSO attributed the drop to a favourable base effect and easing prices of key commodities.
Rural CPI inflation for July was recorded at 1.18%, down from 1.72% in June, while urban inflation slowed to 2.05% from 2.56%. Economists suggest this sharp disinflation could strengthen the case for monetary easing by the Reserve Bank of India, especially if subdued price pressures persist.
However, experts caution that weather conditions and global commodity trends will remain critical variables. With inflation well below the RBI’s medium-term target of 4%, policymakers may find greater flexibility in balancing growth and price stability.
