Retail Inflation Eases To 1.55% In July, Lowest In Eight Years

India's retail inflation eased further in July, coming in at the lowest in the last eight years and the second-lowest in the current series, with the decline led by a fall in prices of food items.

The consumer price index-based inflation moderated to 1.55% in July, from 2.1% in June, according to data from the Ministry of Statistics and Program Implementation on Tuesday. The consumer food price index disinflated by 1.76% compared to -1.06% in the same period. Vegetables disinflated at 20.7% in July compared to -19% in June.

Core inflation, that excludes the volatile food and fuel components, saw a downtick to 4.2% in July from 4.5% in June, according to Bloomberg.

Headline inflation was higher than economist estimates. Inflation was projected to ease to 1.4% in July, according to a median forecast of economists polled by Bloomberg. This was also the sixth straight month when inflation was below the Reserve Bank of India's 4% target.

ICRA expects the CPI food and beverage print to revert to an inflation in August 2025 from deflation of 0.8% in July 2025. Consequently, the headline CPI inflation is likely to inch up to about 2% in August 2025, with an average CPI inflation of 3-3.2% in FY26, Aditi Nayar, chief economist at ICRA said.

The expected uptrend in the forward-looking inflation trajectory, particularly the 4%-plus prints for Q4 FY26 and Q1 FY27, could limit the space for rate cuts in the upcoming policy meetings, she added.

• Cereal inflation remained at 3.3% in July.

• Meat and fish prices declined by 0.6% compared to a decline of 1.6% in the previous month.

• The inflation rate for milk and milk products was 2.7% compared to 2.8% in the previous month.

• Clothing inflation was at 2.5% compared to 2.55% a month ago.

• Housing inflation was the same as the preceding month at 3.2%.

• Fuel and light inflation was at 2.7% in July compared to 2.55% in June.