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Key Points

India's retail inflation likely dropped to 2.7% in May, according to a Bank of Baroda report. The decline was primarily driven by easing food prices, offering relief to consumers. This keeps inflation comfortably below the RBI's target range of 4-6%. Meanwhile, cooling US inflation has increased expectations of Federal Reserve rate cuts.

Key Points: India Retail Inflation Dips to 2.7% in May as Food Prices Ease

  • India's retail inflation likely eased to 2.7% in May
  • Food inflation decline drives CPI moderation
  • Inflation stays below RBI's medium-term target
  • US inflation also cools, fueling Fed rate cut expectations
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India's retail inflation likely declined further to 2.7% in May: BoB Report

Bank of Baroda report predicts India's CPI inflation fell to 2.7% in May, driven by cooling food prices, staying below RBI's target.

"CPI inflation is expected to moderate to 2.7% in May'25, led by softening food inflation – Bank of Baroda Report"

New Delhi, June 12

Retail inflation in India is expected to have eased to 2.7 per cent in May 2025, according to a report by Bank of Baroda (BoB).

The Ministry of Statistics and Programme Implementation, Government of India, is likely to release the official Consumer Price Index (CPI) data later in the day. In April, CPI inflation was 3.16 per cent.

The report highlighted that expected moderation was largely led by a decline in food inflation, offering some relief to consumers and policymakers alike. This projection signals continued stability in domestic price levels and reflects the impact of improving food supply conditions.

The report said, "In India, CPI inflation is expected to moderate to 2.7% in May'25 (BoB Estimate), led by softening food inflation".

The report noted that the moderation in India's Consumer Price Index (CPI) was in line with expectations and highlighted a positive trend in inflation control efforts.

A softening in food prices contributed significantly to the drop, helping CPI inflation settle below the Reserve Bank of India's (RBI) medium-term target range.

The report also highlighted that the retail inflation in the United States showed signs of cooling. The US CPI increased by just 0.1 per cent month-on-month in May 2025, lower than the estimated 0.2 per cent and down from 0.2 per cent in April.

The decline was mainly driven by a sharp drop in gasoline prices, even as food and shelter prices rose.

This softer inflation data from the US has fueled expectations that the Federal Reserve may resume interest rate cuts. The probability of a rate cut in September 2025 has now risen to 60 per cent, compared to about 53 per cent just two days ago on June 10.

The report also highlighted "Separately, investors also monitored comments from the US and China on the recently concluded trade talks, while awaiting the fine print of the agreement".

Market reactions have been mixed. US stocks on Wednesday reflected a cautious mood as the softer inflation figures raised concerns over the strength of future economic growth. On the other hand, Asian equities showed resilience, buoyed by the positive developments in US-China trade relations.

Overall, the moderation in inflation in both India and the US provides some breathing space for central banks and sets the stage for potential shifts in monetary policy.

- ANI

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Reader Comments

Here are 6 diverse Indian perspective comments for the inflation article:
R
Rajesh K.
Good news for common people like us! Lower inflation means our household budgets won't be stretched too thin. Hope the vegetable prices stay stable during monsoon season 🤞 The RBI deserves credit for managing this well.
P
Priya M.
While the headline number looks positive, I'm still paying ₹100/kg for tomatoes in Bangalore. Food inflation may be down but common items still feel expensive. Government should focus more on supply chain improvements.
A
Amit S.
This is why India is becoming an economic bright spot! Controlled inflation + good growth = perfect combo for investors. Our macroeconomic stability looks better than many developed nations right now. 🇮🇳
S
Sunita R.
Hope this translates to lower EMI rates soon. As someone paying home loan, even 0.5% rate cut would make big difference. RBI should consider reducing repo rate in next policy meeting.
V
Vikram J.
The report is optimistic but we must watch global oil prices carefully. Any spike there can reverse this trend quickly. Also, monsoon performance will be crucial for maintaining food inflation control.
N
Neha T.
As a small business owner, stable inflation helps in planning better. But wish the benefits would reach rural areas more - farmers still struggle with input costs while consumers get cheaper food. Need balanced growth.

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