India's retail inflation hits 3.16% in April, lowest since July 2019

India's retail inflation, measured by the Consumer Price Index (CPI), eased to 3.16% (provisional) in April, down 18 basis points from 3.34% in March, marking the lowest monthly inflation rate since July 2019, when it stood at 3.15%. At this rate, the retail inflation remains within the RBI's medium-term target of 4% for the 3rd consecutive month; the retail inflation was 3.61% in February. Food inflation for April 2025 stood at 1.78% (provisional) YoY, while the corresponding inflation rates for rural and urban areas are 1.85% and 1.64%, respectively.

In the past 13 months, the food inflation has seen a sharp decline of 91 basis points in April 2025 in comparison to March 2025, when it stood at 2.69%, and is the lowest after October 2021. All India inflation rates for CPI(General) and CFPI over the last 13 months are shown below.

The significant decline in headline inflation and food inflation during April 2025 is attributed to a decline in the inflation of vegetables, pulses & products, fruits, meat and fish, personal care and effects and cereals and products. The government data shows rural inflation saw a significant decline in headline and food inflation in April 2025. The rural headline inflation stood at 2.92% (provisional) in April 2025, while the same was 3.25% in March 2025. The food inflation in the rural sector was 1.85% in April vs 2.82% in March 2025.

The urban retail inflation saw a decline from 3.43% in March 2025 to 3.36% in April 2025, while food inflation in urban areas declined from 2.48% in March 2025 to 1.64% in April 2025.

The housing inflation came in at 3% in April 2025, while it stood at 3.03% in March 2025. The education inflation stood at 4.13% in April compared to 3.98% in the previous month. Health inflation came in at 4.25% in April 2025 (up from 4.26% in March), while transport & communication were recorded at 3.73% in April compared to 3.36% in March. The fuel & light inflation stood at 2.92% in April as compared to 1.42% in March 2025.

Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA, says while the recent rise in temperatures in North India and unseasonal rainfall in parts of peninsular India may cause a spike in vegetable prices in the second half of May, boosting the CPI inflation print, we project it to print around 3.5% in the ongoing month.

"The benign April 2025 headline inflation print, expectations of another sub-4% print in May 2025, the dip in crude oil prices in the recent weeks, and the IMD’s forecast of an above normal monsoon in 2025 as well as an early onset in Kerala will allow the MPC to continue to place a higher weight on growth vis-à-vis inflation, when it meets in June 2025. We anticipate the CPI inflation to average 3.5% in FY2026, with the prints for Q2 and Q3 sharply trailing the MPC's projections for these quarters, allowing for an additional 75 bps of rate cuts in this calendar year. A 25 bps rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 bps each in the August and October 2025 policy reviews. If the GDP growth print for Q4 FY2025 does not report an acceleration from the 6.2% seen for Q3 FY2025, the MPC may consider frontloading the rate easing, with a 50 bps cut in the upcoming review," says Nayar.

The top five major states in India with the highest year-on-year inflation for April 2025, among states with a population of more than 50 lakh, were Kerala, leading with an inflation rate of 5.94%, followed by Karnataka at 4.26%, Jammu and Kashmir at 4.25%, Punjab at 4.09%, and Uttarakhand with an inflation rate of 3.81%.

In a bold recalibration of its policy priorities, the RBI on April 9 reduced the repo rate by 25 basis points to 6% and shifted its stance from ‘neutral’ to ‘accommodative’. The minutes of the MPC meeting reveal a consensus among the panel members with a clear signal that India’s inflation trajectory has aligned with the central bank’s medium-term target of 4%, and monetary policy now has room to spur domestic demand.

The RBI’s baseline inflation forecast for FY26 now stands at 4.0%, with quarterly prints expected to remain between 3.6% and 4.4%. Importantly, inflation expectations among households and firms have also cooled, further anchoring the price outlook.

According to the MPC, the significant softening of headline inflation and a benign outlook, especially on food prices, signals a likely durable alignment with the target. While the risks are evenly balanced around the baseline projections of growth, uncertainties remain high in the wake of the recent spurt in global volatility, states the minutes.