MUMBAI: India’s retail inflation eased to a 69-month low of 3.16% in April 2025, driven primarily by a continued decline in vegetable prices, according to the latest Consumer Price Index (CPI) data released by the Ministry of Statistics and Programme Implementation on Monday.
This marks the second consecutive month that headline inflation has remained below the Reserve Bank of India’s (RBI) upper tolerance band of 6%, strengthening expectations of monetary easing in the coming policy meetings.
In March 2025, retail inflation clocked 3.34%.
“With the vegetable index dipping further, and compressing the food inflation, the headline CPI inflation eased further to a 69-month low 3.16% in April 2025,” said Aditi Nayar, Chief Economist & Head-Research & Outreach at ICRA Limited.
Analysts cautioned that weather conditions could lead to a temporary uptick in prices later in May. “While the recent rise in temperatures in North India and unseasonal rainfall in parts of peninsular India may cause a spike in vegetable prices in the second half of May, boosting the CPI inflation print, we project it to print around 3.5% in the ongoing month,” said Nayar.
She added that a combination of favorable factors—including a likely sub-4% inflation print in May, falling crude oil prices, and an expected above-normal monsoon—could provide the RBI’s Monetary Policy Committee (MPC) room to prioritise economic growth.
“The benign April 2025 headline inflation print, expectations of another sub-4% print in May 2025, the dip in crude oil prices in the recent weeks, and the IMD’s forecast of an above normal monsoon in 2025 as well as an early onset in Kerala will allow the MPC to continue to place a higher weight on growth vis-à-vis inflation, when it meets in June 2025,” Nayar said.
ICRA expects CPI inflation to average 3.5% in FY2026, with Q2 and Q3 readings likely to undershoot the MPC’s projections. This could pave the way for rate cuts totaling 75 basis points (bps) this calendar year. “A 25 bps rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 bps each in the August and October 2025 policy reviews,” she noted.
However, the timing and magnitude of rate action may hinge on GDP data. If the GDP growth print for Q4 FY2025 does not report an acceleration from the 6.2% seen for Q3 FY2025, the MPC may consider frontloading the rate easing, with a 50 bps cut in the upcoming review.