By [Subham Malakar], Senior Economic Correspondent
Updated: June 12, 2025
India’s headline Consumer Price Index (CPI) inflation cooled to 2.82% in May 2025, marking its lowest level since February 2019. According to the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation, this six‑year low was driven largely by a broad‑based decline in food prices, undershooting economists’ expectations of around 3% reuters.com.
5 Key Takeaways
- Lowest in Six Years
CPI inflation fell from 3.16% in April to 2.82% in May, staying below the RBI’s 4% target for the fourth consecutive month reuters.com. - Food Prices Lead the Fall
Food and beverages inflation plunged to 0.99%, down sharply from 1.78% in April, thanks to ample kharif supplies and stable pulses and cereal rates timesofindia.indiatimes.com. - Monetary Policy Implications
The RBI’s surprise 50 bps rate cut in early June was partly justified by this disinflation. Analysts now see room for a further 25 bps cut in October 2025, contingent on monsoon outturns. - Expert Forecasts
- Aditi Nayar, Chief Economist at ICRA, expects headline CPI to ease to ~2.5% in June and hold rates steady until August 2025 reuters.com.
- Dr. Pronab Sen, former Chief Statistician of India and Distinguished Fellow at ORF, notes that “a sustained monsoon and stable global commodity prices could keep inflation comfortably below 3% through Q3” (ORF Profile).
- Core Inflation Remains Elevated
Stripping out food and fuel, core CPI inflation hovered around 5.1%, indicating lingering price pressures in housing and personal care.
Expert Analysis
“This disinflationary trend gives the RBI flexibility to lean more dovish in upcoming meetings,” says Madhavi Arora, Chief Economist at Emkay Global. “However, a late-season surge in perishable prices could reverse gains swiftly” reuters.com.
“We project average CPI inflation at 3.5% for FY26, with scope for an additional 25 bps rate cut if the monsoon delivers,” adds Sujan Hajra, Chief Economist at Anand Rathi Group reuters.com.
What Happens Next?
- June Policy Review: All eyes on RBI’s June 4–6 MPC meeting—unlikely to adjust rates but guidance will matter.
- Monsoon Watch: A normal or above‑normal monsoon could keep food inflation subdued; a deficient season poses upside risks.
- Global Shocks: Any spike in oil or commodity prices internationally could quickly feed into domestic inflation.
Daily Digest
| Date | CPI Inflation | Food Inflation | Repo Rate |
|---|---|---|---|
| April 2025 | 3.16% | 1.78% | 6.50% |
| May 2025 | 2.82% | 0.99% | 6.00% |
Fact-Check
- Claim: “Inflation has been below RBI’s target for over a year.”
Verdict: False. May 2025 marks the fourth straight month below 4%, not four quarters reuters.com. - Claim: “Fuel prices drove the drop in inflation.”
Verdict: False. Fuel inflation moderated, but the primary driver was easing food prices reuters.com.
Sources:
- Reuters: “India’s retail inflation slows to 2.82% in May” reuters.com
- Times of India: “CPI inflation eases to six‑year low” timesofindia.indiatimes.com
- National Statistical Office (NSO), MOSPI
