Retail Inflation Drops to Six-Year Low, Clearing Path for Rate Cuts

Retail inflation in India fell to a six-year low of 3.16% in April 2025, driven by lower prices of vegetables, fruits, pulses, and proteins. This decline is expected to prompt the Reserve Bank to implement further rate cuts. The Consumer Price Index stood at 3.34% in March.

Retail inflation in India has edged down to a six-year low of 3.16% in April 2025, buoyed by the reduced costs of vegetables, fruits, pulses, and other protein-rich items. This development provides the Reserve Bank of India ample room for another rate cut in its forthcoming June monetary policy review.

The Consumer Price Index (CPI), a key measure of inflation, was registered at 3.34% in the preceding month and 4.83% in April 2024. Notably, food inflation plummeted by 91 basis points in April 2025, achieving its lowest mark since October 2021, as per data released by the National Statistics Office (NSO).

Experts suggest a domino effect on policy rates, with Aditi Nayar, Chief Economist at ICRA Limited, proposing a 25 basis point cut in June, followed by further decreases. The trajectory of GDP growth in the coming months will significantly influence the Reserve Bank's monetary strategies in curtailing inflation.

(With inputs from agencies.)