India’s Retail Inflation Falls to 6-Year Low of 3.16% in April, Fuelled by Softer Food Prices

Ira Singh
Khabar Khabaron ki,14 May ’25

India’s retail inflation eased to a six-year low of 3.16% in April, down from 3.34% in March, driven by a sustained drop in food prices. The latest reading marks the third consecutive month that inflation has stayed below the Reserve Bank of India’s (RBI) medium-term target of 4%, reinforcing expectations of monetary easing in the upcoming policy review.

In comparison, CPI inflation stood at 4.83% in April last year and was last recorded this low at 3.15% in July 2019.

Food inflation,which comprises nearly half of the Consumer Price Index (CPI) basket — declined sharply to 1.78% in April from 2.69% in March, despite the intensifying summer heatwaves. The moderation was led by a broad-based decline in prices of vegetables, cereals, and pulses. Vegetable prices fell by 11% year-on-year, steeper than the 7.04% drop recorded in March. Pulse prices declined by 5.23%, accelerating from a 2.73% fall, while the price rise in cereals moderated to 5.35% from 5.93% a month earlier.

Rural inflation also cooled to 2.92% in April from 3.25% in March, while urban inflation eased slightly to 3.36%, compared to 3.43% in the previous month.

“The CPI print today sets the stage for another rate cut by the RBI in its June meeting, of 25 basis points,” noted Sakshi Gupta, Principal Economist at HDFC Bank. “The fall in food prices and stable core inflation provide the central bank room to support growth without risking price stability.”

The wholesale price index (WPI)-based inflation, another key indicator, is also expected to have softened to 1.76% in April from 2.05% in March.

With early forecasts of an above average monsoon this year, expectations for a strong harvest and a pick-up in rural demand are on the rise — positive signs for an economy that remains heavily reliant on agriculture.

During the last Monetary Policy Committee (MPC) meeting, RBI Governor Sanjay Malhotra reportedly stated that the inflation trajectory was clearly heading downward, aided by favourable food price trends. He noted that inflation could ease further in FY26, offering respite to households navigating cost pressures. However, he also noted that the central bank remains vigilant against potential global shocks.

The RBI has reportedly projected CPI inflation for FY2025-26 at 4%, with estimates of 3.6% for Q1, 3.9% for Q2, 3.8% for Q3, and a slightly higher 4.4% in Q4, indicating a manageable inflation outlook for the year ahead.