News Brief
India’s Retail Inflation Hits Over Six-Year Low, Raising Hopes For More RBI Rate Cuts
India's retail inflation in June is 2.1 per cent
India’s retail inflation sank to its lowest level in over six years in June, coming in at 2.1 per cent compared to 2.82 per cent in May, driven largely by a fall in food prices and a favourable base effect, official data from the Ministry of Statistics and Programme Implementation revealed on Monday (14 July).
This marks the eighth consecutive monthly decline in the Consumer Price Index (CPI), fuelling expectations that the Reserve Bank of India (RBI) might have further room to ease interest rates.
So far in 2025, the Central Bank’s Monetary Policy Committee has already reduced the policy repo rate by a cumulative 100 basis points to 5.5 per cent
However, it has signalled caution, adopting a ‘neutral’ stance in June and warning that monetary policy has “very limited space to support growth”.
Despite this caution, market watchers are buzzing over the possibility of more cuts this year, especially as inflation stays comfortably below the RBI’s 4 per cent medium-term target for a fifth straight month, The Indian Express reported.
Meanwhile, wholesale inflation also slipped into negative territory, with the Wholesale Price Index recording a decline of -0.13 per cent in June, its first dip below zero in 20 months.
Core inflation, however, ticked higher to 4.4 per cent, fuelled by surging precious metal prices, notably gold, which soared 35.98 per cent.
Economists expect inflation to remain subdued, potentially running 80-100 basis points below the RBI’s forecast for 2025-26, sparking further speculation about future rate cuts and the positive implications for consumer spending and growth.
