Retail inflation hits six-year low in June, driven by sharp drop in food prices

India’s retail inflation cooled to a six-year low in June 2025, with the headline Consumer Price Index (CPI) inflation falling to 2.10% year-on-year — the lowest since January 2019.

This marks a decline of 72 basis points from May 2025, when inflation stood at 2.82%.

“The significant decline in headline inflation and food inflation during the month of June 2025 is mainly attributed to the favourable base effect and a decline in the inflation of vegetables, pulses and products, meat and fish, cereals and products, sugar and confectionery, milk and products, and spices,” the ministry said in a statement.

Rural areas saw a more pronounced easing in prices. Headline inflation in rural India dropped to 1.72% in June from 2.59% in May. The Consumer Food Price Index (CFPI) for the rural segment fell into negative territory, registering -0.92% in June compared to 0.95% in May. In urban areas, inflation fell from 3.12% in May to 2.56% in June. Urban food inflation also slipped sharply, from 1.01% in May to -1.22% in June.

Among major food categories, oils and fats saw the steepest price increase at 17.75% year-on-year, followed by personal care items at 14.76%. In contrast, vegetable prices plunged by 19%, while pulses and products dropped by 11.76%, providing significant relief to household budgets.

While food prices cooled, some non-food categories saw moderate inflation. Housing inflation in June rose slightly to 3.24%, up from 3.16% in May, though this index is compiled only for urban areas. Education costs rose by 4.37%, marginally higher than May’s 4.12%. Health inflation edged up to 4.43% in June from 4.34% a month earlier. Transport and communication inflation stood at 3.90%, while fuel and light inflation eased to 2.55% in June from 2.84% in May.

Regionally, Kerala reported the highest inflation at 6.71%, followed by Punjab at 4.67% and Jammu and Kashmir at 4.38%.

The data was compiled based on prices collected by the National Statistical Office from 1,114 urban markets and 1,181 villages, covering nearly all states and union territories. In June, 100% of rural markets and 98.5% of urban markets were covered, with price reporting rates of 88.5% for rural and 92.2% for urban markets.