Key Points

The retail inflation in July was also lower by 55 basis points than the 2.1 per cent for the previous month of June this year which was the lowest level of retail inflation since January, 2019.

Food Inflation in July this year fell into the negative zone at -1.76 per cent as prices declined compared to the same month of the previous year. There was a also decline of 75 basis points in food inflation in July, in comparison to June. This is the lowest level of food inflation since January 2019.

The significant decline in headline inflation and food inflation during July, 2025 is mainly attributed to favourable base effect and to decline in inflation of pulses, vegetables, cereals, egg and sugar.

The inflation rate also fell due to the decline in cost of transport and communication and education. Besides, there was a mild drop in housing inflation during the month.

Meanwhile, the Reserve Bank (RBI) has pegged India’s CPI inflation at 3.1 per cent for 2025-26 as the steady progress of the monsoon and robust kharif sowing are expected to keep food prices in check.

RBI Governor Sanjay Malhotra recently said, “The inflation outlook for 2025-26 has become more benign than expected in June. Large favourable base effects combined with steady progress of the southwest monsoon, healthy kharif sowing, adequate reservoir levels and comfortable buffer stocks of foodgrains have contributed to this moderation.”

CPI inflation, however, is likely to edge up above 4 per cent by Q4:2025-26 and beyond, as unfavourable base effects, and demand side factors from policy actions come into play. Barring any major negative shock to input prices, core inflation is likely to remain moderately above 4 per cent during the year, he explained.

- IANS