CPI inflation eases to six-year low of 2.10% in June on favourable base effect, decline in food prices

The significant decline in headline inflation and food inflation during the month of June 2025 is mainly attributed to favourable base effect and decline in inflation of Vegetables, Pulses and Products, Meat and Fish, Cereals and products, Sugar and confectionery, Milk and products and Spices.

The headline and food inflation in the rural sector during the month in review came in at 1.72 per cent (provisional) while the same was 2.59 per cent in May 2025. Urban inflation declined from 3.12 per cent in May 2025 to 2.56 per cent (Provisional) in June 2025. However, sharp decline is observed in food inflation from 1.01 per cent in May 2025 to -1.22 per cent in June 2025.

Vegetable inflation dropped to -19.00 per cent in June from -13.70 per cent in May, pulses and products inflation stood at -11.76 per cent in June as against -8.22 per cent in May. While Cereals and Products inflation came in at 3.73 per cent, milk and products inflation stood at 2.80 per cent. Fuel and light inflation came in at 2.55 per cent. 

According to the NSO data, housing inflation came in at 3.24 per cent in June from 3.16 per cent in May, while clothing and footwear inflation dropped to 2.55 per cent in June from 2.67 per cent in May. Inflation for health was at 4.43 per cent in June and education inflation came in at 4.37 per cent.

Reacting to this, Radhika Rao, Executive Director and Senior Economist, DBS Bank, said, “Despite the sequential rise in perishables, especially vegetables, the broad food basket remained on a disinflationary path led by cereals and pulses, keeping headline inflation in check. In addition, core-core readings also stayed benign, reflecting slack in the economy, which was also mirrored in the sub-1 per cent core non-food manufacturing WPI inflation.” The weak June inflation reading will feed into expectations that the RBI MPC could warm up to further cuts in this cycle, she added.