Retail inflation in July slows to 8-year low of 1.5%
New Delhi: Retail inflation dropped to 1.55 per cent in July, its lowest level in eight years, according to government data released on Tuesday. This is the first time since January 2019 that the figure has fallen below the Reserve Bank of India’s (RBI) comfort band, which is set at 4 per cent with a margin of 2 per cent on either side.
Data from the National Statistics Office (NSO) shows that retail inflation stood at 2.1 per cent in June and 3.6 per cent in July 2024. The last time a lower rate was recorded was in June 2017 at 1.46 per cent.
“The significant decline in headline inflation and food inflation during the month of July, 2025, is mainly attributed to favourable base effect and to decline in inflation of pulses and products, transport and communication, vegetables, cereal and products, education, egg and sugar and confectionery,” the NSO stated.
Year-on-year food inflation turned negative at 1.76 per cent in July, marking the lowest level since January 2019. Rural inflation stood at 1.18 per cent, while urban areas registered 2.05 per cent.
Among states, Kerala recorded the highest consumer price inflation at 8.89 per cent, followed by Jammu and Kashmir at 3.77 per cent and Punjab at 3.53 per cent. Assam posted the lowest rate at -0.61 per cent.
Earlier this month, the RBI kept the repo rate steady at 5.5 per cent, opting to monitor the impact of previous rate cuts and global developments. The central bank has reduced the repo rate by 100 basis points since February.
During the August monetary policy briefing, RBI Governor Sanjay Malhotra cautioned that consumer price inflation could move above 4 per cent in the final quarter of 2025-26 due to base effects and policy-driven demand.
Price data for the Consumer Price Index (CPI) is gathered from 1,114 urban markets and 1,181 villages across the country. The CPI remains the primary tool for the central bank’s inflation targeting framework, which guides interest rate decisions and broader monetary policy.
