India’s retail inflation fell to 3.16% in April 2025, marking its lowest level in nearly six years. This steep decline has been driven largely by falling food prices, particularly vegetables and pulses, providing some relief to consumers and signaling a favorable economic trend.
According to government data released on May 13, the inflation rate has now stayed below the Reserve Bank of India’s medium-term target of 4% for the third consecutive month. A major factor behind this cooling is the continuous slowdown in food inflation, which eased to 2.14% in April—its sixth straight monthly decline. Vegetables saw a sharp year-on-year price drop of 11%, while pulses and cereals also became more affordable compared to previous months.
Interestingly, core inflation, which excludes food and fuel, remained steady around 4% to 4.1%. This suggests that the moderation is not limited to food items alone but extends to other categories as well, indicating broad-based price stability.
The drop in inflation comes at a time when the RBI has already taken steps to lower interest rates and adopt an accommodative stance. With inflation under control, financial analysts from HDFC Bank and DBS Bank expect the central bank to consider additional rate cuts ranging from 25 to 75 basis points in the coming quarters. The decision, however, will depend on future economic data and the progress of the upcoming monsoon season, which will have a direct impact on agricultural output and food prices.
For Indian households, this trend means better purchasing power. For the markets, it creates an optimistic outlook. Lower inflation could also boost corporate earnings, reduce input costs, and fuel consumption-led growth. However, inflation remains high in certain sectors like health and personal care, pointing to uneven recovery patterns across the economy.
As things stand, the current inflation data paints a positive picture. The combination of a favorable monsoon forecast and soft global commodity prices is expected to keep inflation near 3% in the coming months. If these trends continue, the RBI may have more space to prioritize economic growth without risking price instability.
