Historic Low in Retail Inflation

In a surprising turn of events, the Consumer Price Index (CPI) inflation for July 2025 has plummeted to an 8-year low of 1.55%, marking the lowest rate since June 2017. This significant drop represents a 55-basis-point decrease from June 2025 levels, offering a sigh of relief to consumers across the nation.

Food Inflation Enters Negative Territory

Food inflation, as measured by the Consumer Food Price Index (CFPI), has dipped further into negative figures at -1.76% year-on-year, the lowest since January 2019. Rural areas experienced a food inflation rate of -1.74%, while urban areas saw a slightly higher rate of -1.90%. This decline is attributed to reduced prices in pulses, vegetables, cereals, eggs, and sugar, alongside lower costs in transport and communication services.

Rural and Urban Inflation Trends

Rural headline inflation eased to 1.18% from 1.72% in June, with food inflation dropping significantly. Urban areas also saw moderation, with headline inflation falling to 2.05% from 2.56%, and food inflation declining to -1.90% from -1.17%.

Sector-Specific Inflation Rates

While most sectors experienced a cooling effect, fuel and light inflation saw a slight increase to 2.67% in July from 2.55% in June. Urban housing inflation remained stable at 3.17%, and education inflation decreased to 4.00% from 4.37%. Health inflation, however, rose to 4.57% from 4.38%, and transport and communication inflation decreased significantly to 2.12% from 3.90%.