Softening of inflation to provide substantial boost to households, businesses

IANS June 12, 2025 426 views

India's inflation has dramatically cooled down to its lowest level in four years, presenting a promising economic landscape. The retail inflation rate of 2.82% in May represents a significant decline from previous months. Experts like Hemant Jain from PHDCCI are optimistic about the potential boost to consumer and industry sentiments. The soft inflation trend, coupled with expectations of a good monsoon, suggests a positive trajectory for India's economic growth.

"This is the lowest year-on-year inflation recorded since February 2019" - Hemant Jain, PHDCCI President
Softening of inflation to provide substantial boost to households, businesses
New Delhi, June 12: The softening of CPI inflation would provide a substantial boost to households and businesses, industry chamber PHDCCI said on Thursday.

Key Points

1

Retail inflation softens to 2.82% in May

2

Food inflation drops to 0.99% lowest since 2021

3

Rural and urban segments show significant inflation reduction

4

Good monsoon expected to further cool prices

The retail inflation for May has softened to 2.82 per cent, marking a notable reduction of 34 basis points compared to April (3.16 per cent).

“This is the lowest year-on-year inflation recorded since February 2019 and gives further boost to consumer and industry sentiments,” said Hemant Jain, President of PHDCCI.

The year-on-year inflation rate, based on the All-India Consumer Food Price Index (CFPI), for the month of May compared to May 2024 is 0.99 per cent (provisional), which is the lowest since October 2021.

“This marked softening of headline and food inflation during May 2025 is mainly attributed to the decline in prices of pulses and products, vegetables, fruits, cereals and products, household goods, services, sugar and confectionery, and eggs,” Jain added.

CPI and food inflation also significantly softened in both the rural and urban segments of the economy. In the rural segment, the headline inflation stood at 2.59 per cent (provisional) in May, compared to 2.92 per cent in April, whereas food inflation was observed at 0.95 per cent (provisional) in May, down from 1.85 per cent in April.

“Looking ahead, we expect food inflation to cool further, attributed to the anticipated good monsoon. Moreover, crude prices are expected to stabilise within the range of $60-$65 per barrel in the short to medium term, a development that will substantially boost private final consumption expenditure and, consequently, stimulate higher economic growth,” said Jain.

While this is a structural validation of India’s food-price resilience, the soft CPI phase may have hit its cyclical bottom, said Arsh Mogre, Economist Institutional Equities, PL Capital.

“What follows next is a test of how long this sub-4 per cent zone can be sustained before base normalisations, kharif shocks, or geopolitical disruptions reassert themselves into the inflation path,” he noted.

Reader Comments

R
Rajesh K.
Finally some good news for common people! With vegetable prices coming down, my monthly kitchen budget will get some relief. Hope this trend continues through the festival season. 🙏
P
Priya M.
While the numbers look positive, I'm skeptical about how much this actually benefits middle-class families. Prices of essentials like milk and cooking oil haven't reduced much in my local market.
A
Amit S.
This is great for small businesses! Lower inflation means better margins and more working capital. Maybe now we can finally give our employees that long-pending salary hike.
S
Sunita R.
The monsoon forecast looks promising too. If we get good rains, farmers will benefit and food prices may stabilize further. Fingers crossed! 🤞
V
Vikram J.
RBI should consider reducing interest rates now. Lower inflation plus rate cuts would be a double boost for home buyers and industries looking to expand.
N
Neha P.
While the headline numbers are positive, we must ensure this benefits all sections equally. The government should monitor whether price reductions are reaching the poorest households in both urban and rural areas.

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Tags:
India Inflation Economic Recovery PHDCCI Consumer Price Index Hemant Jain Economic Outlook