Rising gold prices and global tariff tensions poised to push CPI higher in upcoming months: Report

The report added that higher CPI, which is a measure of inflation, could occur even if food prices remain stable, as the cost of non-food essentials, particularly precious metals, plays an increasingly significant role in driving overall inflation.

As per the inflation data released by the Ministry of Statistics and Programme Implementation on Tuesday, retail inflation in India in April fell to 3.16 per cent from 3.34 per cent in March.

The April CPI slips to six-year lows as the decline in inflation is attributed to a decrease in prices of vegetables, pulses and products, fruits, meat and fish, personal care and effects and cereals and products.

Effectively, overall inflation declined 18 basis points in April 2025 compared to the same period last year.

According to the data, core inflation has remained almost flat at 4.09 per cent in April, while core inflation excluding gold has also stayed unchanged at 3.3 per cent.

Core CPI ex-transport post-recording a spike in March (4.26 per cent) has again softened to 4.18 per cent. Within the core inflation category, personal care inflation has moderated from 13.50 per cent in March to 12.90 per cent.

Core inflation is defined as a measure of inflation that removes volatile, short-term price changes in key categories, primarily food and energy, in order to portray a more steady, long-term trend in price increases.

Going further, the UBI sees another 50 basis points repo rate cut divided between June and August.

"With FY25 CPI at 3.7 per cent and April 25 CPI also well below 4 per cent at 3.16 per cent, we maintain our call of another bps repo rate cut divided between June and August," the report adds.

The inflation level gives confidence to economists and analysts, as current inflation rates are within the Reserve Bank of India's (RBI) manageable range of 2-6 per cent.

Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable.

Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent.

After the RBI's April monetary policy review meeting, the central bank said that inflation is expected to remain under control in the financial year 2025-26.

Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well.

The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time before cutting it for the first time in about five years in February 2025.