NEW DELHI: India’s headline retail inflation fell sharply to 1.55% in July 2025, down 55 basis points from June’s 2.10%, marking its lowest level since June 2017, according to data released by the National Statistics Office (NSO) on Tuesday.
The drop was driven largely by a steep fall in food prices. The Consumer Food Price Index (CFPI) registered a deflation of 1.76% year-on-year in July, compared with a 0.01% contraction in June. Rural food inflation stood at -1.74% while urban food inflation was slightly deeper at -1.90%.
This is the lowest food inflation reading since January 2019. The NSO noted that food inflation declined by 75 basis points from the previous month, reflecting a favourable base effect and easing prices of key items.
The rural CPI inflation for July was 1.18%, down from 1.72% in June, while urban inflation slowed to 2.05% from 2.56% over the same period.
Economists expect the sharp disinflation to strengthen the case for monetary easing by the Reserve Bank of India, especially if price pressures remain subdued in the coming months. However, they caution that weather conditions and global commodity prices will remain key factors to watch.
The July reading is well below the RBI’s medium-term inflation target of 4%, offering significant comfort to policymakers as they balance growth and price stability.